HOUSTON-In a sales-leaseback transaction, tire company Michelin North America Inc., headquartered in Greenville, SC, sold its 663,000-sf distribution center to a net-lease joint venture of which First Industrial Realty Trust Inc. of Chicago is a partner. Michelin, which has owned the building since its construction in 1994, signed a 10-year lease on the structure, located at 8800 City Park Loop Dr., in the city's near northeast submarket.
Though financial details of the transaction were not available in this off-market transaction, Robert Micera, senior vice president and national head of lease investments with First Industrial, tells GlobeSt.com that bulk distribution facilities in the area have cap rates ranging between 7% and 9%.
The building's assessed value is $12.4 million, and sources in the area estimate that the facility could have exchanged hands for anywhere between $25 million and $30 million. Michelin's 10-year lease was also not uncommon in such transactions, Micera adds, as similar sales-leaseback agreements have lease terms of 10 to 15 years. The lease consideration was not released; however, similar bulk distribution warehouses in the submarket have a going lease rate of $3.40 per sf, triple net.
"The sales-leaseback gives us complete ability to meet the needs of our customers," says Chris McNutt, Michelin's senior real estate associate, in a prepared press statement on the transaction. Michelin execs could not be reached for comment by press time.
Micera notes that the transaction is part of his industrial REIT's nationwide investment program. "We have a strong program for both single- and multi-tenant industrial properties throughout the country," he says. "Houston is one of our markets."
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