Burton Katzman, DRA Advisors Recap 2.2 MSF Industrial Portfolio

30860 Sierra Drive. Image courtesy of Burton Katzman

Acting as the sponsor, Burton Katzman recently formed a $240 million joint venture with DRA Advisors for the recapitalization of a 2.2 million-square-foot portfolio of industrial assets located in the Midwest. Newmark pulled double duty on the transaction, arranging the joint venture and orchestrating the financing on behalf of the partners.

The group of assets consists of 24 light industrial properties and is 99 percent leased. The properties are all sited in infill locations, including suburban Detroit, where the joint venture acquired the approximately 39,000-square-foot warehouse at 30860 Sierra Drive in Chesterfield Township, Mich.

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The property, which is home to RJ Logistics, came under Burton Katzman’s ownership in 2018 in a $1.4 million transaction and was acquired by the joint venture for nearly $2.7 million in February 2023, according to Macomb County records. All told, the portfolio counts more than 40 businesses on its tenant roster.

This recapitalization is just the beginning for the newly formed joint venture. Together, Burton Katzman and DRA plan to amass a collection of industrial properties in Midwestern locations featuring below-market rental rates, thereby capitalizing on the value-add factor presented by rising industrial real estate prices and their connections into the automotive industry. Burton Katzman will also enhance the seed portfolio by engaging in new development and expansion activities at several locations.

Ongoing endeavor

For Newmark, the arrangement of the Burton Katzman-DRA partnership marks another move in the firm’s goal of increasing its equity financing services centered on raising capital for platform and programmatic joint ventures. In December 2022, Newmark brought Maya Capital Partners and Artemis Real Estate Partners together in a programmatic joint venture targeting value-add self-storage properties across the Northeast.

Newmark’s Dustin Stolly, Jordan Roeschlaub, Eden Abraham and Daniel Canvasser spearheaded the transaction. In terms of financing for the joint venture, Stolly said in prepared remarks that the opportunity was well received by the capital markets community and demonstrated the strong institutional investor demand for light industrial assets.