Hudson Valley Management, a New York real estate investment firm, was searching for a below-market, cash-flowing industrial investment in the Greenville, SC market. Competition for stabilized assets was high, driving cap rates below our client’s investment criteria. While there were some properties available at below market rates, they were class B and C properties with high vacancies. However, we knew that tenant demand for industrial space was strong and steady.
Our team identified a high vacancy +/- 108,000 sf class C building that was suitable for a multi-tenant leasing structure. We analyzed recent leases of similar assets in the market and helped the client purchase the building via a master lease at pricing that allowed a strong return with conservative leasing assumptions. Further, we advised the client on a repositioning strategy with the a very healthy yield profile. Over the following nine months (in the height of the pandemic), our team leased all five 21,000 sf bays and the front office space to multiple tenants. These leases were among the top 40 completed in the Upstate in 2020 according to Costar.
Understanding the intense demand from investors for fully leased industrial properties, our team produced a marketing package to test the market for a cash-flow investment sale of the asset. With a limited 2-day marketing blast, we received strong interest on the asset at pricing that yielded a 106% return on costs within the 12 months of acquisition. While the client ultimately opted to retain the asset in its portfolio, the interest received formed the basis for a highly successful internal recapitalization of the asset.
“Rob, Kristin, and Gary were highly engaged in guiding our investment group through the search, renovation, leasing, and recapitalization phases of our Greenville industrial investment. Their market knowledge, timing, and leasing abilities resulted in our achieving a superior return, and we look forward to working on future opportunities with them.”