Best Real Estate Deals 2020: Q&A with Cliff Booth

Cliff Booth, Founder and Chairman of Westmount Realty Capital, LLC, shares highlights about Garland Logistics Pointe, one of Westmount’s former industrial properties that was recently nominated by Dallas Business Journal for the 2020 Best Real Estate Deals (BRED) Awards. Cliff talks about the challenges that the company overcame, key moments and value-add projects executed during the lifetime of the deal, and what this deal taught him in this exclusive Q&A interview.

 

What characteristics of the property initially attracted you to pursue this deal?

This property has an extremely desirable location near three major interstates (I-635, I-30, and US 75) in one of DFW’s largest industrial submarkets. Westmount owned another multi-tenant distribution center (Logistics Pointe in Charlotte, NC) and saw an opportunity to leverage our experience and execute similar capital projects to enhance the property’s value. We acquired Garland Logistics Pointe in 2012 during an opportunistic time in the market.

 

What type of tenants occupied the property and were there any crucial leases that aided the deal’s success?

Most existing tenants were in the food and beverage industry with the largest tenant being NFI, a third-party logistics provider servicing Kraft Foods. Since FDA regulations required higher standards of cleanliness and upkeep, most interior spaces were in excellent condition upon acquisition. We saw an opportunity to establish a long-term relationship with a credited tenant by negotiating directly with Kraft Foods (instead of through NFI) partially because we knew Kraft was motivated to stay in the Garland area because of tax incentives from the city. This relationship was prosperous for both parties and resulted in Kraft significantly expanding their presence in the facility.

 

What type of value-add projects were executed at the property?

Early capital improvements focused on primarily exterior upgrades including replacing roofs, repairing parking lots, and rebuilding the front gate and office areas. We also focused on improving the tenant profile by signing credit-worthy tenants to long-term leases of 10-15+ years. In three years, Westmount increased the occupancy from 68% to 92%. Later, we completed several special projects for Kraft as part of their lease renewals. These projects included raising the roof by 15’ in one of the warehouses to accommodate large storage racks and converting several dry warehouses to cold storage facilities.

 

What challenges did you face during the lifetime of the deal and how did you overcome them?

We switched capital partners midway through the hold period. In 2015, we had added tremendous value to the property and conversations with the first equity partner, a global investment fund, resulted in its wish to exit the investment. However, Westmount saw further opportunity to complete value-add projects in the wake of the growing popularity of E-commerce and grocery delivery. We successfully recapped Garland Logistics Pointe and continued as the operating GP into a new partnership with another equity fund.

 

What lead to the decision to sell the property and what have you learned from this deal?

Westmount has been a longtime believer in the value of infill cold storage facilities. We have been investing in cold storage since the mid-2000’s. This deal is the culmination of that belief and proves that cold storage will continue to be an extremely desirable asset type fueled by demand for last-mile logistics space. We brought the asset to market in 2020 when demand for cold storage was peaking from the growth of E-commerce and accelerated online grocery sales fueled by the pandemic. 

 

What are some of Westmount’s future aspirations? Is the company still focusing on logistics and cold storage space?

Westmount targets industrial, multifamily, and office properties. This year, we have significantly grown our acquisitions platform, specifically our regional acquisitions capabilities. We hired two key director-level personnel to focus on sourcing Southeast industrial and multifamily deals (Curtis Walker & Nick Sands). For industrial, we will continue focusing on well-located, light industrial and logistics space suitable for our value-add strategy. We believe cold storage has robust staying power and will continue to outperform for many years to come and will therefore be acquiring and redeveloping existing facilities and developing new ones.

 


 

About Westmount Realty Capital

Westmount Realty Capital, LLC is a time-tested, privately held, Dallas-based commercial real estate company that has achieved exceptional performance, with a core team in place, for more than 30 years. Westmount is seen as an innovator and leading-edge company in the industry and is a relationship-driven trusted operating partner of numerous U.S. and foreign institutional and private capital sources. The company is active within the U.S., specializing in value add and opportunistic investments, and has navigated successfully through multiple market cycles. For additional information, contact www.westmountrc.com.

 

For more information, contact:

Westmount Realty Capital, LLC

info@westmountrc.com

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