Evergreen Buys $68M Net-Leased Portfolio

PASADENA, CA-Tenant-in-common sponsor Evergreen Development LLC has acquired a 2.7-million-sf portfolio of net-leased office and industrial buildings from a Michigan-based private investment firm. The $67.75 million deal was brokered by Baum Realty Group of Chicago.

Chad Firsel, a Baum Realty EVP who brokered the deal along with Baum VP Michael Johnson, tells GlobeSt.com that Evergreen was one of a number of potential buyers who were interested in the properties because they represented a rare opportunity to acquire such a large portfolio of net-leased buildings.

The new Evergreen portfolio consists of three office properties and eight industrial and manufacturing facilities in six states, with all of the space occupied by Fort Mill, SC-based home furnishings manufacturer Springs Global US Inc. on long-term leases. Four of the properties are located in South Carolina and three are in Georgia, with the others in Alabama, Oklahoma, Pennsylvania and Virginia, including two office properties that serve as the company's global headquarters.

Firsel tells GlobeSt.com that the portfolio sale was "an interesting and unusual deal in that it involved so many facets of the real estate market," including debt defeasance, the net-lease market and the TIC market. The portfolio came with debt that needed to be defeased and, in a case of fortunate timing, "The pendulum in the financial markets swung the right way for the buyer to defease the loan," Firsel says. With interest rates rising, "defeasance became a little bit easier" than it otherwise would have, he explains.

Johnson points out another facet of the deal that was unusual. Springs Global US is a subsidiary of Springs Global Participações S.A., a recently formed joint venture with Springs Industries Inc. and Coteminas, the leading textile manufacturer in South America.The joint venture between Springs Industries Inc., the original tenant and guarantor on the lease, and Coteminas was negotiated and closed while the real estate portfolio was under contract.

While this "created many challenges to selling the real estate and lengthened the time to close," Johnson says, in the end the creation of the joint venture improved the credit worthiness of the tenant and enhanced the value of the deal. With a long-term, guaranteed stream of income from a credit tenant the caliber of Springs Global, combined with the size of the transaction and the diverse markets in which the real estate is located, the deal was an ideal acquisition for a TIC investor like Evergreen Development," Firsel says.

The properties in the portfolio range from 63,630 sf to 106,000 sf for the three office buildings and from 110,000 sf to 552,885 sf for the eight industrial and manufacturing facilities. Springs Global US manufactures and markets brands including Wamsutta, Springmaid, Court of Versailles, Burlington House, Regal, Nanik, Graber, Bali and Daisy Kingdom.

The industrial and manufacturing facilities are in Bartlesville, OK; Calhoun, Dalton and Cartersville, GA; Martinsville, VA; Montgomery, PA, Piedmont, AL and Fort Lawn, SC. The office properties include two in Fort Mill, SC and one in Lancaster, SC.