Ares Lines Up $99M Portfolio Refi

Arden Logistics Parks has refinanced five multi-tenant industrial parks in three states with a total of 11 buildings spanning more than 765,000 square feet with a $99.1 million floating-rate loan provided by an Ares Management Real Estate fund.

JLL Capital Markets arranged the refinancing. The group’s Debt Advisory team was led by Managing Directors Lauren Kaufman and Geoff Goldstein and Senior Director Jillian Mariutti.

The portfolio includes assets in prime, high-barrier-to-entry markets in Florida, Illinois and North Carolina. The properties were acquired in separate transactions from 2023 through 2024. Arden Logistics and JLL did not disclose further details including locations and sizes of the assets.

Arden Logistics Parks implemented various capital improvements and re-leasing strategies to increase occupancy and net operating income during its ownership. The portfolio is currently 84.4 percent leased to a diverse mix of tenants in industries such as health-care manufacturing, technology, automotive and professional services.

Portfolio highlights

The asset collection includes multi-tenant shallow-bay buildings and a single-tenant industrial service facility. The buildings have clear heights ranging from 14 to 24 feet, a combination of dock-high and drive-in loading positions and ample parking.

Many of the assets are strategically located near transportation hubs, including international airports and key interstate highways. Those locations provide tenants excellent access for last-mile distribution and regional logistics operations.

The portfolio has a 10.5 percent mark-to-market opportunity on in-place rents. The JLL Capital Markets team noted that Arden’s value-add strategy positions the assets to continue to capture rent growth they are seeing across supply-constrained submarkets.

Sustained demand

The industrial sector is seeing sustained demand for infill, last-mile distribution facilities due to vacancy rates that are well below national averages and limited new supply in the pipeline. A recent JLL research report noted tenant demand for shallow-bay facilities has remained stable over the past decade, with an average of 250 million square feet of new leases signed each year since 2012. Construction activity for the smaller multi-tenant industrial assets represent about 0.7 percent of the total inventory under construction, leading to the lack of supply.

Investors are attracted to the shallow-bay infill sites because they deliver a diversified tenant mix, cater to a broad array of businesses and are more resilient to market fluctuations. With shorter lease structures and larger tenant demand that allows for more frequent rent adjustments, shallow-bay assets also offer inflation protection, according to industrial experts.

Growing portfolio

Philadelphia-based Arden Group launched Arden Logistics Parks in November 2021. The platform targets small- and medium-bay multi-tenant warehouses in urban locations. ALP’s current portfolio spans 11 million square feet across 15 markets including Atlanta, Boston, Dallas, Houston, Indianapolis, Philadelphia, Chicago, Charlotte, N.C., and Tampa, Fla.

In December 2023, ALP acquired a 34,700-square-foot industrial service facility and industrial outdoor storage asset in Addison, Ill., leased to UPS through an off-market transaction. The seller had completed a capital improvement plan at the 3.61-acre site in the Chicago industrial market prior to the sale and secured the tenant.

Also in December 2023, ALP hired Stream Realty Partners as the exclusive leasing agent for North Park 34, an 865,000-square-foot industrial park in Houston. ALP had acquired the 34-building portfolio in November 2021 for just under $80 million and implemented a capital improvement program, which led to 436,000 square feet of new leasing.

Other activities in 2023 included the purchase of a three-building, 195,532-square-foot portfolio of shallow-bay industrial assets with more than 40 tenants that marked the firm’s entry into the West Palm Beach, Fla., market, and acquisition of Northbridge Business Center in Charlotte. The four-building, 174,000-square-foot flex industrial portfolio has four assets ranging from 22,655 square feet to 65,382 square feet.