Garland Logistics Park
Download Case Study- 2012
Acquisition Year
- 8
Years
Held - 1.1M
Total Square Footage
- 3
Number of Buildings
- 87%
Occupancy at Sale
OPPORTUNITY
Originally built as a Safeway distribution center in the 1970’s, Garland Logistics Park consists of three dry and refrigerated warehouses totaling over 1.1M square feet. The business park is situated near three major interstates in one of Dallas-Fort Worth’s largest industrial submarkets. Its strategic infill location, large 61-acre site, and adjacent access to both Union Pacific and BNSF railroads made it an attractive property for a multi-tenant distribution center.
Westmount identified several key competitive traits and value-add initiatives for the property. Its premier location with direct highway access enables a high velocity of goods in and out of the facility, a feature that is highly desirable for food and beverage distribution. The property’s interior was in far better shape than the exterior due to compliance with FDA regulations for tenants in the food and beverage industry. Additionally, 60+ acres of land provided an opportunity for trailer storage that could not be matched by new construction.
SOLUTION
Westmount acquired the property in 2012 at 68% occupancy. At acquisition, most existing tenants were in the food and beverage industry with the largest tenant being NFI, a third-party logistics provider servicing Kraft Foods. NFI’s existing 230,000 SF lease was well under-market because previous ownership prioritized occupancy over leasing rate due to lender financing requirements tied to occupancy. With NFI’s lease set to expire in 2014, Westmount saw an opportunity to establish a long-term relationship with an investment grade tenant at a higher rate by negotiating directly with Kraft Foods, who was tied to the Garland area due to tax incentives from the city.
Westmount focused on improving the tenant profile at the property by signing credit-worthy tenants to long-term leases of 10-15+ years. In three years, Westmount increased the occupancy from 68% to 92%, negotiated new leases directly with Kraft Foods and other major tenants, and put over $3,000,000 into tenant improvements. In 2015, Westmount successfully completed the recapitalization of the asset and continued as the operating GP into a new partnership. Based on Westmount’s experience with a similar cold storage and distribution facility in Charlotte, NC, we believed the property still had further potential for value creation. Between 2016-2020, Westmount completed several special projects including a cold storage conversion and a roof raise.
TAKEAWAY
Westmount identified multiple areas of value-add potential throughout the hold period of the asset. Westmount was initially attracted to the property due to its irreplaceable strategic location. After acquisition, Westmount implemented a long-term leasing and capital improvement strategy focused on strengthening credit tenancy and occupancy. Westmount developed a successful working relationship with a major investment grade tenant which helped identify additional strategic capital projects that provided the property a competitive advantage in leasing activity. In total, Westmount executed over $37,000,000 in capital projects for tenants throughout the ownership of the property.
Westmount demonstrated its foresight of the surge in demand of cold storage space and last-mile distribution. The 2020 COVID-19 pandemic boosted demand for cold storage industrial space. Growing demand from the investment community for institutional grade cold storage assets prompted Westmount and its equity partner to fully realize the investment.
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