The venture will buy properties that "either we move down the credit quality a little bit in some cases [or] shorter lease terms in a number of cases where a more proactive management role can be taken," Wollan says. ORIX president and CEO David Brown acknowledges the joint venture "is a riskier proposition" but should also achieve higher returns.
The JV will purchase properties in primary, secondary and tertiary markets. ORIX formed the joint venture with Boulder Net Lease Funds because they focus on single-tenant net-leased properties and are "clearly the leader in this sector," Brown says. "They have a long history of generating good transaction volume and doing good transactions in this net lease space on both office and industrial buildings, particularly in the size range we are looking for," Wollan says.
The JV plans to acquire properties on an all-cash basis, and its first acquisition was a 210,000-sf industrial building at 1415 W. Commerce Way in Lincoln, NE, Brown says. The building is mainly warehouse space with slightly more than 8,000 sf of office space. The property, which also includes a 165,000-sf storage yard and 44,000 sf of surface parking, was purchased from Dansid LLC, based in Medicine Lodge, KS, for $8.3 million. A cap rate was not disclosed. The building is fully leased by American Tire, which uses the building to distribute truck, agricultural and automobile tires.
"We liked the real estate. We liked the tenant and the location and, frankly, it was a yield-driven investment as much as anything," Wollan says.
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