TX Industrial Portfolio Commands $88M
- Nov 07, 2018
A joint venture between Stos Partners and Washington Capital Management has acquired an eight-building, 1.4 million-square-foot multi-tenant industrial portfolio in Laredo, Texas, for $88 million, from a privately held national real estate firm.
The deal represents Stos Partners’ first in the state of Texas.
“It was an off-market deal of large scale; it was basically 100 percent leased, with a tenant base comprising 60 to 70 percent national credit tenants such as Sony, Toyota and UPS; plus, it’s in a submarket that has tightly controlled supply, making it difficult to buy into it, so this opportunity was definitely something we wanted to take advantage of,” Jason Richards, Stos Partners’ partner, told Commercial Property Executive. “There is some good upside in the rent, so not only will we get stabilized cash flow but we have some nice ways to improve returns over time.”
The buildings are located at 11302 A/B/C East Point Drive, 417 Union Pacific Blvd., 418 Union Pacific Blvd., 505 Union Pacific Blvd., 11921 Hayter Road and 11909 Hayter Road.
The transaction resulted in a 7-month escrow period, and during that time, a couple of tenants rolled, but Stos Partners successfully signed several new leases at the property, adding to a tenant base consisting of primarily publicly traded credit tenants.
“Our company is opportunistic and we’re always looking for these type of deals,” CJ Stos, Stos Partners’ principal, told CPE. “We’re focused on quality, low-finish, multi-tenant industrial parks and portfolios, and this property had strong fundamentals.”
The plan is to put new roofs on the majority of the portfolio, with some minor facade updates, including new paints and adding new signage and landscape.
Vital border city
Located in the U.S. border city, considered an epicenter of trade between the U.S. and Mexico, the property is situated only 5 miles from Laredo’s World Trade Bridge and World Trade Port of Entry, which is the busiest commercial crossing in the U.S., facilitating more than $300 billion in imports and exports annually.
It’s estimated that approximately 2.5 million trucks crossed the border in 2017, and the market is also home to 510 freight forwarders, 210 trucking companies and 105 U.S. Customs Brokers.
According to Richards, over the past 16 years, industrial vacancy in Laredo stands between 1 and 2 percent, with vacancy rates averaging 4.65 percent and never exceeding 8.8 percent.
“Laredo is all about third-party logistics going North and going South,” Richards said. “The international bridge there handles something like 16,000 trucks a day. When you drive around the town, you are a minority among a sea of trucks. Knowing how much international trade has grown in previous years, we knew that it was a strong fundamental to that location and submarket.”
In January, Stos Partners sold a 19,950-square-foot, mixed-use property in the coastal community of Carlsbad, Calif., for $8.1 million, with a capitalization rate of 5.3 percent.
Image courtesy of Stos Partners