Behind Investcorp’s $280M Portfolio Acquisition

Victory Commerce Center. Image courtesy of JLL

A 434,000-square-foot Class A distribution and fulfillment center in a Cleveland suburb fully leased by Amazon was among the 32 industrial properties totaling approximately 3.5 million square feet in four major markets that Investcorp acquired for $280 million.

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Victory Commerce Center, completed in 2019 by owner Westminster Capital at 43500 Victory Parkway in Glenwillow, Ohio, was sold for $50 million to an affiliate of Investcorp, a global private equity company, according to Cuyahoga County, Ohio, records. County records also show the Investcorp affiliate received a $31.3 million loan from MetLife Real Estate Lending LLC toward the purchase. Amazon leased the entire facility in July. The property is located within the larger Diamond Business Center, which is home to several other institutional-quality corporate users. It is situated 3.5 miles from the intersection of Interstates 271 and 480 and 9.5 miles from the Interstate 80 Ohio Turnpike.

Investcorp said the new acquisitions expanded the firm’s U.S. industrial holdings to about $2 billion in value, with 22 million square feet across more than 260 buildings. The latest transactions comprise a 96 percent leased portfolio of Class A and B warehouse distribution and flex industrial buildings with a diversified tenant base across a range of industries. Most of the properties are located in the Cleveland and Chicago industrial markets but other MSAs in the mix include Columbus and Cincinnati, Ohio.

Investcorp, which was the second-largest international buyer and fourth-largest international seller of U.S. real estate in 2019, is focusing much of its real estate investments in industrial, warehouse and logistics assets.

Herb Myers, managing director and co-head of Real Estate North America at Investcorp, said in a prepared statement the pandemic had underscored the importance of industrial real estate assets located near major population and logistics hubs. He added e-commerce sales are experiencing accelerated growth and are expected to generate between 400 million and 1 billion square feet of excess demand for industrial space over the next several years. Myers said the newly acquired properties align with the firm’s criteria for targeting stable, cash flow-generating assets with further upside potential.

Babak Sultani, managing director in the placement and distribution team at Investcorp, said in a prepared statement Investcorp also expects there will be greater demand for industrial real estate assets like those acquired due to greater supply chain diversification and more on-shoring of goods in the U.S. to maintain higher inventory levels.

JLL’s multiple roles

JLL marketed the 40.4-acre Glenwillow property on behalf of the seller, Westminster Capital. Investcorp engaged a separate JLL team to place the acquisition loan and a third JLL team brokered the long-term, triple net lease with the existing, investment-grade tenant.

Matthew Van Wie, vice president of asset management at Westminster Capital, said in prepared remarks the timely lease-up and successful sale of Victory Commerce Center is a reflection of the demand for well-located modern industrial space, as well as a testament to assembling the right team. He credited JLL, developer Geis Cos. and the village of Glenwillow for contributing to the success of the development.

The JLL Capital Markets team representing the seller was led by Senior Managing Director John Huguenard and Managing Director Sean Devaney. The JLL Capital Markets Debt Placement team included Managing Director Matthew Schoenfeldt, Senior Managing Director Michael Gigliotti, Executive Managing Director Mike Tepedino and Senior Director Brian Walsh. The JLL Agency Leasing team was led by Vice President David Stecker.

Devaney said in prepared remarks there was robust interest in the property because of the tenant, strong fundamentals and opportunity to acquire a mission-critical facility leased at market rents.