Under Armour has purchased the land in Port Covington where it plans to build its new headquarters for $70.3 million — more than twice what CEO Kevin Plank's private real estate firm paid in 2014, according to land records.
The roughly 50-acre waterfront site includes a Wal-Mart that closed this year and a former Sam's Club that recently reopened as Under Armour offices. It also includes more than 8 acres of submerged area.
The sale is the first deal since Plank's firm, Sagamore Development, won city backing for a plan to transform the roughly 260-acre peninsula with new offices, homes, parks and shopping. Sagamore, which amassed about 160 acres there over several years, has said it plans to sell land to partners to redevelop the area, which is south of Interstate 95 on the Patapsco River's Middle Branch.
The sale to Under Armour is among the more delicate of those transactions, given the close ties between the two companies, one of which is publicly traded.
Sagamore, which acquired the properties in 2014 for $35 million, made "no profit" on the deal, spokesman John Maroon said in a statement, pointing to operating and site development costs, including environmental remediation.
Under Armour commissioned an independent appraisal before the purchase, Neil Jurgens, Under Armour's vice president of corporate real estate, said in a statement.
Sagamore and Under Armour did not respond directly to questions about how much they have invested in the site, which the state valued at about $60 million for tax purposes in 2015.
Building permits filed with the city since the purchase report more than $24 million in construction work. Much of those costs came from a roughly $23.6 million Sam's Club renovation, which spokesmen for the two companies said was paid for by Under Armour.
Properties that switch uses or are purchased by developers and win public approvals for subdivision often gain significant value, said John J. Hentschel, founder and CEO of Hentschel Real Estate Services.
"There's no way of knowing without doing a ton of research, but there are a number of reasons why it would go up," he said, adding that the firms were probably especially careful about pricing because they knew an insider transaction would face scrutiny at a publicly traded company.
Sagamore is expected to make $400 million from land sales during the multi-decade project, according to an analysis conducted for the city.
Sagamore has said it will seek $1.1 billion in public financing and grants for infrastructure outside the Under Armour campus. A request for $535 million in tax increment financing from the city is pending. It would be repaid from increased property taxes from the project.
Critics have said the firm would profit from public investment, such as infrastructure and the rezoning, without providing adequate benefits back to the city.
Under Armour received approval this year to build a 3.9 million-square-foot campus on the peninsula and expects to submit plans for the first phase in the fall, Jurgens said.
The master plan calls for about 500,000 square feet of offices, a parking garage and a man-made lake, part of a system designed to filter runoff and water pumped from the Patapsco to cool campus buildings before releasing it back into the river.
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Later phases call for several towers, a fieldhouse and a stadium.
More than 500 people already work at "Building 37" — named for Plank's jersey number on the University of Maryland football team — which Under Armour previously agreed to lease for $1.1 million in annual rent, with payments starting this year, according to a filing with the Securities and Exchange Commission.
The firm, which employs about 2,000 people in Baltimore, expects the campus to eventually host about 10,000 employees.
Taking ownership of the land signals that the company is preparing to move forward with bigger plans, said Auburn Bell, an affiliate professor of marketing at Loyola University Maryland's Sellinger School of Business.
"They've been out there with a lot of fanfare, a lot of communications about what it will mean for the city, and now I think kind of putting a stake in the ground and putting some financial resources behind it says they're 110 percent behind this," Bell said.