Brennan Investment Grabs National Industrial Portfolio for $155M

In a joint venture with London-based Gatehouse Bank plc, the private real estate investment firm acquired a national industrial portfolio from an affiliate of AIC Ventures.

There’s little that pleases commercial real estate investors more than a fully leased building, and Brennan Investment Group L.L.C. just snapped up 20 of them in one fell swoop. In a joint venture with London-based Shariah-compliant bank Gatehouse Bank plc, the private real estate investment firm acquired a national industrial portfolio from an affiliate of AIC Ventures.

Nary a region is ignored in the group of properties; it spans 12 states from coast to coast. The mission-critical facilities are not just at maximum occupancy, they are each home to single tenants. Additionally, time is on the new owners’ side in terms of facing any looming vacancies, as the weighted-average remaining lease term for the portfolio is 14 years.

Real estate investment advisory firm Arch Street Capital Advisors assisted Gatehouse in the transaction, while Colliers International stood in for AIC. Brennan and Gatehouse secured financing for the deal through The Royal Bank of Scotland plc, which provided a five-year, fixed-rate CMBS loan.

“Over the past year and a half, U.S. industrial markets have demonstrated remarkable strength, with nearly every major market posting positive absorption and rising occupancies,” said Michael Brennan, chairman and managing principal of Brennan.

“The acquisition of 20 critical use facilities, amidst resurgent tenant demand, provides our investment a high degree of predictability both now and in the future.”  Certainly, the national industrial market is in recovery mode. The quarter-over-quarter vacancy rate dropped 30 basis points to 9.1 percent in the first quarter, according to a report by commercial real estate services firm Jones Lang LaSalle, and positive absorption continued for the eighth consecutive quarter.

Brennan is eager to expand its industrial holdings and to that end, the industrial real estate investment firm is on the hunt for both single properties and portfolios in such core markets as metropolitan Washington, D.C., and metropolitan Los Angeles, home to the ports of Los Angeles and Long Beach, the two largest and busiest ports in the country. The company also has its eye on top industrial markets in Texas, Central Florida and the Midwest. Just last month, Brennan acquired a group of five surplus corporate warehouse facilities in Chicago.

There is, of course, competition for industrial portfolios. In June alone, DRA Growth and Income Fund VII purchased Weingarten Realty Investors’ multi-state collection of 52 assets totaling 9.6 million square feet for $382.4 million, and affiliates of Blackstone Real Estate Partners VII snapped up a 16.7 million-square-foot portfolio, buying the 68 assets from DEXUS Property Group for $770 million. Talk about being keen on industrial, Blackstone is multiplying its presence in the sector by leaps and bounds. In addition to last month’s DEXUS deal, the alternative asset manager agreed to take control of Walton Street Properties’ $2.1 billion, 23.4 million-square-foot CalWest Industrial Portfolio via the acquisition of a controlling interest in the portfolio’s debt.