Detroit Industrial Asset Drives $140M Deal

October 31, 2024

Investment Detroit Industrial MidwestMoreNews

Ford Motor Co. fully occupies the property.

Aerial shot of Ford's distribution facility in Monroe, Mich. — The property features insulated precast concrete wall panels. *Image courtesy of Colliers*

Four Springs TEN31 Xchange, a Delaware Statutory Trust, has purchased a 1.1 million-square-foot industrial asset in Monroe, Mich., for $139.5 million, according to S&P Global. FSXchange used $76.7 million in acquisition financing secured by Colliers. InSite Real Estate previously owned the asset that is fully leased to Ford Motor Co., CommercialEdge data shows.

Four Springs launched the industrial DST offering at $157.2 million in August. At the time, the required equity amounted to $80.5 million and was suitable for Section 1031 Exchange or direct investment alike.

The leverage ratio clocked in at 48.8 percent. The DST offering also included five five-year extension options and a 2 percent annual base rent increase.

InSite purchased the 97.8-acre development site and broke ground on the build-to-suit project two years ago. Completed this February, the facility features 36-foot clear heights, 100 loading doors—expandable to 150—and four grade-level doors, as well as 900 vehicle and 700 trailer and parking slots, respectively.

Ford Motor Co. fully occupies the property under a triple-net, 10-year lease. Ford has invested more than $70 million in the facility to maximize operational efficiency, which consolidated several older facilities throughout the Midwest.

Ford will also use the facility to assemble and repackage vehicle parts. Additionally, the site includes an entitled lot that is shovel-ready for up to 450,000 square feet of future industrial and logistics development.

Located at 14741 Laplaisance Road, the building is 40 miles southeast of downtown Detroit, having direct access to Interstate 75. Additionally, the facility is about 11 miles away from Ford’s velocity parts distribution center, a 1 million-square-foot property in Newport, Mich., also developed by InSite.

Colliers Executive Vice President Jeremy Thornton and Vice President Lauren Smyle, together with Senior Vice Presidents Nicole Sayers and Andrew Gibson, arranged the financing on behalf of the DST.

Four Springs bullish on triple-net industrial

FSXchange is a subsidiary of Four Springs Capital Trust, a REIT that focuses on purchasing and managing single-tenant commercial properties including industrial, medical, office and retail assets with long-term, triple-net leases.

Last month, FSXchange fully subscribed its $150.5 million FSC Industrial Portfolio 27. The DST offering, which launched in April of last year, included an equity raise of $78.3 million and a 1031 debt placement of $72.2 million.

The portfolio consisted of 22 fully leased industrial assets encompassing 1.3 million rentable square feet across 13 states. The tenant roster included Domino’s, Columbia Gas and New York State Electric & Gas, among others.

Motor City industrial investment hits the breaks

Metro Detroit plays a crucial role in the U.S. auto industry through its interstates and railways, as well as the Detroit Metropolitan Airport and The Port of Detroit. However, industrial investment in the Motor City was tepid during the first three quarters of the year, a CommercialEdge report shows.

Year-to-date through September, the total industrial sale volume in Greater Detroit amounted to $226 million, the same source shows. Assets traded on average for $76 per square foot, nearly halving the national average of $130 per square foot.

Several Midwestern markets fared better, such as Chicago and the Twin Cities, their respective industrial investment volumes clocking in at $2.1 billion and $862 million during the same period, the report reveals. Despite the higher sales totals, properties still traded below the national average in Chicago ($98 per square foot) and Twin Cities ($94 per square foot).

Detroit’s vacancy rate stood at 4.6 percent in September. The metro became the tightest industrial market in the Midwest, surpassing Columbus, Ohio (5.1 percent) and Kansas City, Mo. (5.2 percent), but also Chicago (7.8 percent) and Indianapolis (8.3 percent).