- What Brookfield is offering 10 distribution properties in five U.S. markets
- Why The listing is routine recycling for Brookfield
- What next A buyer could boost net operating income 79% over the next decade by raising rates upon rollover
Brookfield is marketing a 1.8m sq ft warehouse portfolio spanning five top industrial markets that could fetch US$330m ($473m).
The fully leased package comprises 10 small and midsize distribution properties in Atlanta, Boston, Dallas, California’s Inland Empire and Northern New Jersey. Bids are expected to come in around US$186/sq ft, well below estimated replacement costs of US$210/sq ft. A purchase at the estimated value would produce an initial annual yield of 5.1%. CBRE has the listing.
With average in-place rents about 30% below market rates, the pitch is a buyer could boost net operating income 79% over the next decade by raising rates upon rollover. The sales campaign also touts the homogeneity of the portfolio – in terms of the quality and type of buildings, as well as the size and strength of their respective markets.
The listing is routine recycling for Brookfield, a major industrial owner that has remained active in the sector. In July, the investment giant paid US$1.26 billion for a 14.6m sq ft package in one of last year’s biggest industrial deals.
The offered portfolio has 12 tenants with a weighted average remaining lease term of 5.5 years. However, two properties have remaining lease terms of less than three years, allowing an investor to achieve near-term upside.
Roughly 37% of the space is in the Atlanta market. The rest is in the Dallas (24%), Inland Empire (19%), Northern New Jersey (11%) and Boston (9%) markets. The average suite size is 145,000 sq ft, which marketing materials tout as a segment for which tenant demand is high and new supply is low. Of the 36.4m sq ft of new warehouse construction starts nationally in the third quarter, just 19% of that space comprised buildings measuring less than 148,000 sq ft.
The warehouses have an average clearance height of 28 feet and truck-court depths ranging from 60 to 185 feet. They are 24 years old on average, but 48% of the overall space has been completed since 2020 and only 6% is more than 25 years old. Brookfield has invested US$14.8 million into improvements at the properties.
All the buildings are within 5 miles of an interstate highway and are near major ports and airports. Each is in a metropolitan area with a population of at least 4m. The sales campaign also touts that each property’s market has a large industrial footprint, as well as strong occupancy and rental rates.
The Atlanta industrial market, for example, totals 747.2m sq ft and is 91.8% leased with average asking rents of US$7.46/sq ft. Dallas, meanwhile, has 1bn sq ft that’s 90.8% leased with average asking rents of US$9.12/sq ft. In the other three markets, industrial space is at least 93% occupied at average rents ranging from US$14.28/sq ft to US$20.07/sq ft.
Brookfield Industrial Portfolio
Property/ City, State/ Market/ Built/ Size (SF)/ WALT/ % of Total NOI
- 4020 Falcon Parkway, Bldg. 100/ Flowery Branch, Ga./ Atlanta/ 2022/ 446,000/ 7.6/ 14.3
- 625 Westport Parkway/ Grapevine, Texas/ Dallas/Fort Worth/ 2000/ 360,000/ 5.3/ 11.1
- 4020 Falcon Parkway, Bldg. 200/ Flowery Branch, Ga./ Atlanta/ 2022/ 204,000/ 5.1/ 7.6
- 244 Belmont Drive/ Somerset, N.J./ Northern New Jersey/ 2023/ 199,000/ 5.2/ 21.5
- 1603 East Steel Road/ Colton, Calif./ Inland Empire/ 2015/ 169,000/ 1.2/ 8.7
- 1601 East Steel Road / Colton, Calif./ Inland Empire/ 2007/ 161,000/ 5.4/ 15.1
- 4 Enterprise Road/ Billerica, Mass./ Boston/ 1996/ 105,000/ 7.3/ 10.3
- 633 Westport Parkway/ Grapevine, Texas/ Dallas/Fort Worth/ 2000/ 66,000/ 2.7/ 3.9
- 3-15 Normac Road/ Woburn, Mass./ Boston/ 1964/ 33,000/ 4.6/ 3.5
- 16-24 Normac Road/ Woburn, Mass./ Boston/ 1964/ 30,000/ 7.2/ 4.0
