PGIM Provides $350M Debt Package for Massive Industrial Portfolio Buy
San Francisco-based Stockbridge Capital Group has nailed down a $350 million debt package from PGIM Real Estate Finance to fund its acquisition of a 26-property national industrial portfolio, according to information from PGIM.
The package included two seven-year, fixed-rate loans that were originated by PGIM’s Jaime Zadra and Elizabeth Velazquez. Stockbridge used the funds for its $570 million purchase of the 6.4-million-square-foot portfolio from global real estate investment firm Westcore Properties, as per a report from IPE Real Assets that cited the sale price.
Stockbridge’s CFO, Kristin Renaudin, along with Nicole Stagnaro and Kristin Paul, represented the firm in its purchase. Eastdil Secured’s Stephen Silk, Jay Borzi and Adam Pastor represented Westcore.
The properties, which include bulk distribution facilities and light industrial properties, are spread across nine markets and five states. The bulk distribution facilities are as large as 1.1 million square feet, which appeal to the growing demand by large investment-grade, big-box tenants.
About 60 percent of the portfolio’s net operating income is generated from assets within major California industrial markets, such as the Inland Empire, East Bay, San Diego and Central Valley.
“Because of their infill locations as well as the trend of mounting construction costs, the portfolio markets have experienced virtually no new light industrial construction in recent years,” Paul, a portfolio manager at Stockbridge, said in a prepared statement. “To us, the combination of these structural and local demand drivers, as well as significant supply constraints, make these properties and markets especially appealing.”
The portfolio comprises 11 properties in California, 12 in Nevada and one each in Arizona, Salt Lake City, Utah, and Indiana, according to information from Westcore. It’s nearly 100 percent leased to big-box and last-mile users, according to the firm.
“It is no secret that e-commerce continues to enhance the attractiveness of high-quality and well-located warehouse and distribution properties,’’ Stagnaro, Stockbridge’s head of opportunistic and platform transactions, said in prepared remarks. “We’re excited about this portfolio because the properties are located in markets with above-average population growth, a propensity toward e-commerce buying and selling, lower overall vacancy rates and higher overall rent growth.’’
Stagnaro added: “These properties tend to support a stickier tenant base … catering to tenants whose core businesses bind them to the limited supply in the local areas where they operate.”
Since September 2016, Westcore had been acquiring and compiling the assets primarily in off-market deals, then renovating nearly all of them and leasing up each one, according to Westcore chairman Marc Brutten.
“This sale demonstrates our business strategy,” Don Ankeny, the president and CEO of Westcore, said in a prepared statement announcing the sale. “We’re careful to select value-add properties where we can make a difference and return a premier asset to a thriving industrial market.”