Invesco Takes Possession of 748,000-SF Kraft Center

FORT WORTH–Surety of close and familiarity helped Invesco Real Estate beat out myriad offers to claim ownership of a 747,528-square-foot, two-building distribution center from USAA Real Estate Co. at Alliance Airport. For its efforts, Atlanta, GA-headquartered Invesco obtained a dry distribution facility, office space, a cool-storage building consisting of approximately 60,000 square feet of freezer space, and Kraft Foods as a long-term, triple-net tenant.

The sales price for the asset on 1005-1006 Railhead Dr. was confidential. CBRE’s Josh McArtor tells GlobeSt.com, however, that, while warehouse and distribution centers typically trade within the $50-$60-per-foot range, this distribution center commanded a higher price because of the unusual nature of the asset, as well as the top-quality refrigeration and freezer equipment it contained.

McArtor, who teamed with CBRE’s Jack Fraker to represent the San Antonio-based seller, adds that USAA bought the facility, a build-to-suit for Kraft, several years ago. After renewing the tenant through an extended long-term lease about a year ago, USAA invested approximately $20 million to completely refurbish the facility.

“They did an absolute, complete office refurbishment, painted the exterior, replaced both roofs and made a full replacement of the HVAC equipment,” McArtor says.

In fact, he continues, upgrades still took place during the escrow and closing processes. “They were still working on the tenant improvements and roofing while we were closing, and the chillers for the refrigeration and freezer space hadn’t yet been completed. We needed the ambient, outside temperatures in Texas to be lower,” McArtor says. Anyone going through the North Texas heat wave of 2011 would understand this issue.

The distribution center hit the market in August, and McArtor says it attracted a great deal of interest; more than a dozen offers came across the table, which came as no surprise to McArtor or Fraker. Replacement costs on the dry warehouse side are around $60 per sf, while costs on the freezer-cooler area are approximately $125 per sf, McArtor comments. Though USAA certainly recouped its investment and then some with the sale, “Invesco bought it at a significant discount to replacement cost,” McArtor says.

Invesco, which was self-represented in the transaction, got the nod due to surety of close. Furthermore, McArtor and Fraker had conducted transactions with Invesco in the past, and there was a level of trust with the buyer. “We never had an issue with them,” McArtor says. “They always do what they say they’ll do.”