Alterra IOS Pays $86M for Outdoor Storage Portfolio

December 22, 2022

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The deal includes industrial assets in eight states.

Heniff Transportation Systems location. Image courtesy of Alterra IOS Manager

Philadelphia-based Alterra IOS Manager, on behalf of its discretionary private equity real estate client, has acquired a 14-property portfolio of industrial outdoor storage assets across eight states for more than $86 million in a sale-leaseback deal with Heniff Transportation Systems LLC.

The portfolio is fully leased by Heniff, a national bulk transportation provider with nearly 100 locations across the U.S. Heniff offers customers a wide range of services including tank, rail transload, ISO depot, cleaning and maintenance solutions.

Matthew Pfeiffer, managing partner at Alterra IOS, said in a prepared statement the Heniff sale-leaseback is a great example of Alterra utilizing its fully discretionary fund to close a complicated transaction on a defined time period for a national tenant that needed capital to finalize its bolt-on acquisition.

The eight states in the portfolio are Florida, Georgia, Illinois, Ohio, Tennessee, Texas, Louisiana and Alabama. The 14 mission-critical locations serve as terminals, maintenance shops and transload facilities in key industrial markets including Savannah, Ga.; Chicago; Dallas-Fort Worth; Houston; Memphis, Tenn.; Cincinnati; Mobile, Ala.; Lakeland, Fla.; and Lake Charles, La.

Parker Pearson, vice president of Alterra IOS, said in a prepared statement the properties are critical infrastructure assets located in key logistics markets across the Central and Southeast U.S. He said the firm is excited to grow their relationship with the Heniff team as they expand their business.

Bob Heniff, founder & CEO of Heniff Transportation, said in prepared remarks Heniff sought a counterparty that provided a certainty of execution to complete a strategic acquisition. Citing the volatility of the capital markets and interest rate fluctuations, Heniff said it was imperative to work with a group that has full discretion over its capital and deal directly with key decision makers to get to closing.

IOS is growing

Alterra was one of the early entrants in the growing IOS subsector within the industrial property sector, having launched its strategy in 2016. Alterra Property Group closed its Alterra IOS Venture II LP fund in March with $524 million in total commitments, well beyond its original fundraising goal of $400 million.

Over the past six years, APG IOS has created tenant relationships in the transportation and logistics, vehicle storage, equipment rental, building materials industries through the acquisition or development of more than 150 properties across 30 states. Sale lease-back transactions like the Heniff deal is one of its IOS strategies used to grow its platform.

IOS has gone from being a niche often owned by small private investors and mom-and-pop operators to a market estimated at $200 billion—and growing. During the past three years, IOS has been increasingly attracting the interest of institutional investors and private equity funds. Demand for IOS grew during the pandemic as e-commerce exploded and continues to be a significant part of the supply chain, as more businesses seek locations for last-mile delivery and also want to be near ports and major industrial corridors. Trucking and truck parking are the heaviest users, particularly by third-party logistics companies.

Heniff deal locations

Three of the properties in the Alterra IOS sale-leaseback deal with Heniff are in Texas, with two in the DFW market and one in the Houston industrial market: 12520 Bay Area Blvd., Pasadena, Texas, 7.32 acres; 15855 Wood Drive, Channelview, Texas, 8.94 acres; and 716 110th St., Arlington, Texas, 4.31 acres. Two are in the Savannah port area of Garden City, Ga., including 6031 Commerce Court, 5.91 acres, and 6053 Commerce Court, 4.17 acres.

The remaining properties are: