Starwood Income Trust Adds 4.1M SF Midwest Industrial Portfolio
The portfolio consists of primarily Class A properties in Chicago, Indianapolis, Columbus and Milwaukee.
CHICAGO—Miami-based Starwood Real Estate Income Trust Inc. has acquired a Midwest industrial portfolio involving 33 assets totaling 4.1 million square feet from locally-based First Industrial.
The portfolio consists of primarily Class A properties in Chicago (43%), Indianapolis, (33%), Columbus (16%) and Milwaukee (8%). The “Midwest Industrial Portfolio” is currently 98% leased to 50 tenants and has maintained an average occupancy of just under 95% over the last 10 years.
According to SREIT’s website, the firm acquired 95% interest in the portfolio for $320 million. SREIT is managed by Starwood Capital.
“Industrial is a great asset class and operating fundamentals point to continued strength in the coming years,” says Garret Overlock, VP of acquisitions at Starwood Capital. “We love this portfolio for SREIT for a number of reasons. These are major industrial markets that service not only local but regional and national distribution needs, the tenant quality and diversity is very high, and the light industrial nature of the portfolio mitigates our exposure to future supply, much of which is concentrated in the bulk industrial space (properties greater than 250,000 square feet).
He notes that light industrial continues to witness the lions’ share of tenant demand in the industrial sector.
Overlock adds that SREOT plans to establish an ongoing partnership with Becknell Industrial in connection with the transaction. Becknell, which is based in Carmel, IN, is a developer, owner and manager of industrial properties across the US.
The portfolio benefits from being in markets with strong transportation networks and low costs of doing business, and is largely comprised of light industrial buildings of less than 250,000 square feet, SREIT reports. Given the average vintage of the assets in the portfolio (2005), the properties benefit from having modern designs that appeal to a broad swath of industrial tenants across all markets – high clear heights, minimal office finish, modern sprinkler systems and lighting packages, and ample outside storage space, the NAV REIT states.
As of Nov. 30, the SREIT portfolio had an estimated total asset value of $1.98 billion across 70 properties.