Sugar Land Industrial Price Outperforms Original Underwriting
In August 2013, on behalf of a core-plus separate account client, CenterSquare acquired 12900 W. Airport Blvd., a 300,000-square-foot industrial warehouse building located in Sugar Land. Sourced off-market from a family trust, the property was 100 percent leased to a single tenant which was underutilizing the building and marketing it for sublease.
While the family trust was motivated to sell the property due to fear of impending vacancy, CenterSquare viewed it as an opportunity to re-lease the property at higher market rents while also improving the tenant quality. As projected, after exercising its five-year renewal option, the tenant decided to vacate in March 2020, allowing CenterSquare to re-lease the building.
In January 2020, a lease was executed with Amazon to assume the final two months of the tenant’s term and invest $15 million in improvements to the building. The property was sold to an institutional buyer this month at a price that yielded a strong return that outperformed original underwriting.
“During the hold period, this investment produced consistent attractive cash flow and as a result of our success re-leasing the building to a superior tenant with zero downtime, exceeded original return projections,” said Jeffrey Reder, managing director of private real estate for CenterSquare. “CenterSquare continues to seek similar investments in attractive industrial assets located in growth markets with current or pending vacancies where we can execute our value enhancement business plan to create core-quality assets.”