South Seattle Distribution Center Sells for $73M
A three-building industrial warehouse portfolio, South Seattle Distribution Center, was sold to current tenant, Charlie’s Produce, for nearly $73 million. JLL Income Property Trust’s sale in excess of $125 per- square-foot was near record pricing for an older vintage property in this market and realized a leveraged equity multiple of 2.6 times its initial investment made originally in 2013.
The 323,000-square-foot three-building portfolio was less than 80 percent leased and had a weighted average lease term of less than two years with significant near-term lease rollover.
“While increasing our portfolio’s allocation to the industrial sector is one of our investment priorities, in this case, a sale to one of the property’s long-standing tenants provided well-above target investment performance to our stockholders while also de-risking one of our largest near-term lease maturities. This sale also removed nearly $5.5 million in future capital expenditures required to re-tenant these buildings,” said Allan Swaringen, president and CEO of JLL Income Property Trust. “As a core income-focused investor, sometimes harvesting gains and redeploying capital in properties and markets with more attractive risk-adjusted returns is prudent – even when we are selling out of a targeted overweight property sector. As a perpetual open-end fund, investing across economic and real estate cycles requires active risk management and timely dispositions.”
Rental rates for warehouse properties in South Seattle more than doubled since Income Property Trust’s acquisition. And, as lease rates approached $1.00 per-square-foot per month in this infill market, larger tenants are beginning to relocate to updated buildings in more affordable locations.