Alterra IOS Snaps Up 16 IOS Sites in $43M Sale-Leaseback Deal With TruGreen

Alterra IOS is celebrating a “Sweet 16” of a different kind. 

The firm just added 16 industrial outdoor storage (IOS) sites to its portfolio, Commercial Observer has learned. The IOS locations, purchased from lawn care company TruGreen in a sale-leaseback deal, total 34.8 acres and 326,400 square feet of warehouse and maintenance space. 

Alterra paid $43 million for the assets — spread across 13 states — in an all-cash transaction, with CBRE’s Jon Fink representing TruGreen in the deal. 

TruGreen is the largest lawn care service provider in the U.S, with almost 2.3 million residential and commercial customers and 275 branches across the country. The 16 properties were secured by Alterra via a 25-year triple-net sale-leaseback deal with the firm. 

The acquisition comes on the heels of another deal Alterra struck with TruGreen in December 2023 for 17 sites across 44 acres and 250,000 square feet of warehouse space. 

“This is the second portfolio we bought from TruGreen directly,” Leo Addimando, co-founder and managing partner of Alterra, told CO. “Around 25 percent of our industrial outdoor storage acquisition strategies are sale-leasebacks that we source primarily from either private equity firms or companies that own real estate firms through portfolio companies. For us, if we’re able to buy a portfolio of assets from a company that we’ve worked with previously and are comfortable with the financial health of the business that they’re in, the real estate itself and then the importance of the real estate to their business, it’s a good investment.” 

Alterra — one of the largest owners of IOS sites in the U.S. — has acquired 300 properties across 36 states over the years. Most recently, in November, it sold 51 assets to Peakstone Realty Trust for $490 million and bought 102 sites. The firm has also raised $1.45 billion in equity from institutional investors in the past seven years.

With geographic diversification being typical within IOS portfolios, the 13-state nature of the TruGreen portfolio didn’t phase Alterra. 

“We’re comfortable transacting across the country and navigating the complexity of different state laws around real estate transactions and different zoning jurisdictions for each of these properties,” Addimando said. “So, this transaction wasn’t overly complex, and the fact there’s one seller makes it even less complex. I wish we could do more transactions that look like this, but it can be competitive when there’s a good tenant involved.” 

Indeed, the IOS space is red hot today, and there’s a lot more competition in the market than there was when Alterra started 10 years ago, Addimando said. 

“What’s interesting though, is we don’t run into our competition very frequently on a deal-by-deal basis,” he said. “How we’re able to create value is, we have a good proprietary sourcing network, and we’re buying a lot of small deals. 

“We’ll buy a $2 million property if it makes sense, and we’ll buy a $100 million property if it makes sense, but when you keep below a purchase price of $10 million the number of sophisticated buyers at that price point is fewer,” he added. “So, it’s not that there isn’t more competition, but the competition that has entered the market over the years is not necessarily trying to do it in as granular a fashion as we’re doing.” 

The institutional capital is typically competitively targeting the bigger deals, such as Realterm’s $277 million acquisition of 13 truck terminals from Brookfield in January, Addimando said, adding, “We try to stay away from those types of really competitive bidding situations, because the return profile ends up falling below our thresholds, specifically on a risk-adjusted basis.” 

Alterra racked up around $800 million of transaction volume in 2024 across 102 properties, and Addimando predicts similar numbers for the firm in 2025. 

“Whether we buy 50 or 150 properties, it’ll be somewhere between half a billion and one billion dollars, with the ticket price being somewhere around $7 million per property,” he said. “It depends on the number of properties and the opportunities that present themselves, of course, and the timing of closings. Deals that are closing in the first quarter of this year were almost certainly originated in 2024, so there’s lag time because of the complexity of zoning, environmental [rules] and other things that are inherent with this property type. But, I think 2025 will look a lot like 2024.” 

Even though the debt markets should become ever so slightly more palatable this year, Alterra will be sticking to all-cash acquisitions, which are then back-levered. 

“Debt today, versus a year or even two ago, is not any cheaper or more expensive, but there’s a lot more lenders now educated on IOS, and who are willing to actually lend on the asset class,” Addimando said. “The availability of debt has certainly increased exponentially, by a factor of at least 2x in the past year. The cost of it has not really changed. It’s maybe gone down a little bit for quality IOS and quality sponsors, but I don’t think it’s gone down materially. The availability of debt has certainly increased, and that’s a big deal, and as important as the cost of debt, to be honest.” 

For now, Alterra is, ahem, “trucking” along nicely with 16 more properties — in locations such as Atlanta, Boston, Denver, Lexington, Ky., Long Island, N.Y., and Washington, D.C. — just added to its portfolio, and many more transactions in the pipeline.

“Closing on another portfolio of this size reinforces Alterra’s position as a premier owner and trusted industry partner within the IOS market,” Chris White, vice president of acquisitions at Alterra, said in prepared remarks. “This portfolio is essential to TruGreen’s ability to serve its customers and perfectly aligns with Alterra’s investment philosophy. It enables seamless connectivity nationwide through well-positioned sites that support crucial transportation and logistics hubs. We’re excited to acquire and support another portfolio of properties that allows the tenant to deliver service seamlessly across the country.”

Cathy Cunningham can be reached at ccunningham@commercialobserver.com.