C&W Arranges $79M Financing Deal for 2 MSF Charlotte-Area Industrial Portfolio

The Keith Corporation Portfolio, a 2 million-square-foot collection of Class A industrial assets in and around metropolitan Charlotte, has been snapped up by a JV with the assistance of $78.5 million of acquisition financing.

By Barbra Murray, Contributing Editor

The Keith Corporation Portfolio, a 1.9 million-square-foot collection of Class A industrial assets in and around metropolitan Charlotte, N.C., has been snapped up by a joint venture with the assistance of $78.5 million of acquisition financing. The group of buyers–consisting of Schmier & Feurring Properties Inc., L&J Schmier Management and Investment Company and Independencia Asset Management L.L.C.–purchased the 10 assets from The Keith Corporation.

Commercial real estate services firm Cushman & Wakefield, which marketed the portfolio on behalf of Keith and orchestrated the financing for the joint venture, orchestrated a 10-year, cross-collateralized loan with five years of interest-only from a lender that was taken with the portfolio’s stable cash flow, diverse tenant roster and long-term leases. As Michael Ryan, a senior managing director with C&W, told Commercial Property Executive, the interest level among lenders was “deep and liquid.” Life companies were very aggressive and went over 70 percent loan-to-value. Ultimately the portfolio was leveraged at 72 percent of the purchase price.

The Keith Portfolio includes five facilities totaling 948,700 square feet in Lincoln County Industrial Park in Lincolnton; two additional buildings encompassing 178,400 square feet in Statesville’s Sherrill Industrial Park; a 241,000-square-foot property at Rock Creek Center in Whitsett; and an 80,000-square-foot facility in the Cleveland County Industrial Park in Kings Mountain. The final component of the group is a 478,400-square-foot build-to-suit development currently under construction for Britax Child Safety Inc. in Charlotte’s Lakemont West Business Park. The project is included in the buyer’s financing deal, allowing for a future advance when the development is completed. The joint venture closed on the acquisition of the nine existing properties in December, at a total cost of approximately $84 million.

There’s even more to love about the group of industrial facilities. The Keith Portfolio is presently fully leased and boasts an historical occupancy rate of 99 percent. “The buyer got great properties, great tenants and they got expansion capability so it was just one of those win-win transactions, where we monetized a piece of our portfolio and the buyer got a collection of extremely good industrial assets,” Alan Lewis, a partner in industrial, land and office development at Keith, told CPE.

The Charlotte-area industrial market is on the upswing and, as noted in a fourth quarter report by C&W, the modest improvement in unemployment, decreasing vacancy rates, and rising rental rates seen in 2012 are expected to continue in the first half of 2013.

“Charlotte is not a primary distribution market but it certainly is a big distribution market and we have quite a manufacturing base as well,” Lewis said. “We’re seeing European companies, we’re seeing Japanese and Chinese companies now coming in and looking at the state and looking at the Charlotte region, so the activity has been pretty good and it certainly seems to be picking up now.”

It’s not just the users who are taking note. “There is a lot more demand for high-quality industrial assets from lenders and investors than there is product,” Ryan said.

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