Thorofare Capital Provides $24M Bridge Loan for SoCal Logistics Acquisition

reprints


Los Angeles-based lender Thorofare Capital has provided $23.7 million in short-term acquisition financing to Colton Real Estate Ventures, a single-purpose entity controlled by Jason Schutzer, the president of private apparel manufacturer Avalon Apparel, for the purchase of the Pellisier Logistics Center in Colton, Calif., according to California state records, San Bernardino County public property records and per a release yesterday from Thorofare that cited JLL as the adviser in the transaction.

SEE ALSO: Colony Capital Sells Six Massive Hotel Portfolios, Unloads $2.7B in Debt

The two-year, fixed-rate bridge loan covered the borrower’s roughly $32.7 million purchase of the newly-built, Class A 232,600-square-foot warehouse and distribution facility from developer Hillwood Investment Properties, according to yesterday’s announcement. Upon completion of construction, the entire property was subsequently leased to JM Apparel Resources under an initial 10-year, NNN lease agreement, “at a fair market [rental rate],” per the release and sources with knowledge of the deal. JM is planning to vacate two existing Los Angeles-area locations in order to relocate to the new Colton development, according to Thorofare. 

Schutzer is the registered agent of the Colton Real Estate Ventures entity, according to information from the California Secretary of State’s website. His firm Avalon could not be reached. Avalon, which was founded in 1990 and is a manufacturer of women’s and children’s clothing and apparel, primarily sells and distributes its apparel to major department stores and national retailers such as Walmart and Target.  

“This financing exemplifies our team’s ability to seek out high quality loan origination opportunities, which fit perfectly within our mandate, and execute swiftly with high conviction,” Thorofare principal and head of originations Felix Gutnikov said in prepared remarks. “We are bullish on state-of-the-art logistics facilities, which are generally benefitting from record levels of institutional debt and equity as well as surging demand from both end users as well as [third party logistics] tenants.”

A JLL debt and structured finance team led by Marc Schillinger, Keith Rosso and Eric Boucher out of the firm’s Century City office represented a “borrowing group” led by Avalon in their arrangement of the financing, which Thorofare closed in just six business days, according to the lender. 

“Our client was in contract to acquire the subject property at significantly below market value, so we are extremely thankful to [the lender], who was able to close quickly,” Schillinger said in a prepared statement.

The property is located at 1901 West Center Street in Colton, Calif., and it sits on more than 12.5 acres. The facility sports 36- to 42-foot clear heights, 24 dock high doors, 168 parking spaces for trailer containers and 219 automated parking spaces. Its location also gives it access to major interstate and highway arteries in I-10, I-215, I-60 and Highway 91.

E-commerce has emerged a resilient winner in a pandemic-stricken economy this year, and in turn, the industrial sector — specifically warehousing and last-mile distribution.

COVID-19 helped e-commerce capture a greater share of overall retail sales, which has pushed demand higher for warehouse and distribution space, according to a second quarter market report from CBRE. Net absorption in the industrial space in the second quarter came in at 19.2 million square feet, bringing the year-to-date total to 54.2 million square feet, per CBRE. The firm noted that warehouse and distribution absorption year-to-date is just under 70 million square feet, which is much higher than the sector’s overall gain due to “negative absorption in other categories like manufacturing.” 

With this, CBRE reported that average asking rents are steadily rising, hitting all-time highs this year despite the pandemic. Through the first half of the year, they came in at $7.96 per square foot, which is 6.3 percent higher on the year, while warehouse and distribution rents, specifically, have risen 5.6 percent in the first half of the year to an average of $6.68 per square foot. 

The sector has reached these benchmarks despite previous forecasts that projected the industrial market would post negative absorption and lower asking rents as a result of the pandemic, according to CBRE analysis. After all, the sector did post six straight quarters of negative net absorption during the last recession, per CBRE. 

This story has been updated since publication to show that Avalon Apparel is not leasing any portion of the logistics asset in question.