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July 2, 2014

ARCP Investment Group Purchases 2.5 MSF Industrial Portfolio from Mesa

By Gail Kalinoski, Contributing Editor

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An investment group led by American Realty Capital Properties has acquired a 2.5 million-square-foot industrial portfolio of energy sector properties from Houston-based Mesa Real Estate Partners, L.P. for $295 million.

The portfolio consisted of 75 fully-leased, single-tenant industrial buildings purchased by Mesa since it was founded in 2011 by Mesa’s co-managing partner and President Tim Horan. More than 80 percent of the buildings are located in Texas, including 23 in the Dallas-Fort Worth Metroplex and eight in the Greater Houston area, according to a release from JLL Capital Markets group, which brokered the deal for Mesa.

The remaining properties are also in areas where there is a large concentration of energy companies: Oklahoma, Louisiana, Arkansas, New Mexico, North Dakota’s Bakken region, western Pennsylvania and eastern Ohio.

More than 70 percent have remaining lease terms of 10 years or longer and all are considered “mission critical” to their tenants’ operations and revenue streams.

“We assembled these properties over a two-and-a-half year period through build-to-suit development and sale-leaseback transactions with strong energy service companies,” Horan said in the release. “The resulting portfolio is believed to be the largest of its kind in the country.”

JLL International Director John Huguenard and Senior Vice President Sean Devaney completed the transaction on behalf of Mesa.

Further information about the deal from New York-based ARCP was not available at press time.

Research reports from Marcus & Millichap about industrial markets note that the strengthening economy in the United States is pushing demand for properties and increasing values.

“Rather than solely centering on ports and intermodal hubs, the emerging trends are fostering more inclusive demand for industrial real estate in a wide range of markets, including secondary and tertiary markets,” the firm’s National Industrial Research Report, First Half 2014, noted. Demand had increased and supply remains limited leading to tighter vacancy rates. The report added that much of the 120 million square feet of new supply expected to come online this year has been pre-leased or is build-to-suit.

In its industrial report for Dallas-Fort Worth, Marcus & Millichap noted that “occupancy and rents are already above pre-recession highs, and further gains in the coming months are anticipated.”

The firm’s Houston report stated, “A high-octane economy is driving growth in most, if not all, industries in Houston, creating new space demand for warehouse, distribution and flex properties.”

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