Taconic Makes Industrial Market Debut With Nuveen in $55M All-Cash Deal in New Jersey
The new year is fast approaching, but it’s never too late for firsts.
The joint venture paid $55 million for the 296,000-square-foot asset, and the transaction marks Taconic’s first foray into the industrial sector.
“Taconic is very pleased to have made its first industrial investment, which provides our portfolio with risk, product type and geographic diversification,” Chris Balestra, president and CIO of Taconic Partners, said.
Located less than a mile from downtown Morristown, the property encompasses a 17.9-acre site and includes a 6.5-acre parking area plus a rooftop solar system. The asset was built in 1986 and today is 100 percent leased to a mix of third-party logistics companies.
“We have been canvassing the MSA for the last couple years — but really in earnest over the last 12 months or so — looking for an industrial deal,” Balestra told CO. “So, when this opportunity was put onto our radar, we jumped on it.”
A Cushman & Wakefield team arranged the sale.
Long-time partners Nuveen and Taconic have invested more than $1.5 billion across over 2 million square feet in the New York area. Earlier this month, the partnership joined forces to acquire the office building at 309 East 94th Street for $70 million and, in July, closed a $260 million fundraising round for its jointly-sponsored value-add fund, New York City Property Fund II. This new industrial deal brings diversification to that fund, which has more than $1 billion in buying power.
“The vehicle will have several heavy, large development deals in it, so when we were looking at portfolio construction, we thought it would be a good idea to bring in something a little less risky, with cash flow out of the gate, to diversify the portfolio,” Balestra said. “We’re happy to be able to bring in a new asset class, and a new geography, for that diversification.”
Not that it was easy, with competition for industrial deals hotter than ever. “We chased many deals in 2021 in the industrial space — and in New Jersey — where we weren’t the winner, so it’s great to pick one up,” Balestra said. “I think one differentiating factor was that we were able to close in all cash, and before the end of the year.”
Nadir Settles, managing director and New York regional head at Nuveen, agreed the partnership’s quick execution in cash was key, “but I also think it was our breadth and depth of experience,” he said. “The Cushman & Wakefield team has a long relationship with us on a domestic basis and the fact you had these combined sponsors coming together and closing in cash gave the seller great certainty. I think that gave us a big competitive advantage versus us being some other institutional buyer that’s not deep in the space.”
Nuveen has amassed a significant industrial portfolio over the years, managing institutional-quality industrial and logistic assets in major distribution markets across the U.S. as well as Europe.
Settles described the industrial sector as having “strong tailwinds” and said the 1 Cory Road deal represented a great diversification play in terms of the Nuveen-Taconic partnership. “This is Taconic’s first industrial foray but it’s not ours; we have deep experience, so that’s why we were very comfortable moving forward with it. This transaction was a diversification in terms of the opportunities that we normally look at together, which is life sciences and high-end development or repositioning of offices. Then, we predominantly buy in New York City, so this is also a diversification to that. The diversification is multifaceted — and it’s diversification to the positive.”
While 1 Cory Road may be Taconic and Nuveen’s first industrial deal together, it won’t be the last.
“I can certainly see us deepening our concentration as more deals become available,” Settles said, while Balestra added: “We will continue to look for additional industrial deals. It’s an asset class that we think has a lot of runway, and is only going to expand in the future.”
Cathy Cunningham can be reached at: email@example.com.