Equus Capital Acquires $1B-Plus Industrial Portfolio

Image by Pashminu Mansukhani from Pixabay.com

Equus Capital Partners Ltd. has acquired a 7.3 million-square-foot, 74-property industrial portfolio in the Phoenix and Tucson metro areas for nearly $1.2 billion. The acquisition was made through Equus-sponsored value-added funds and a consortium of strategic co-investment partners.

An Equus spokesperson confirmed to Commercial Property Executive that the seller is not being disclosed.

The diversified portfolio consists predominantly of multi-tenant infill, shallow-bay properties in established transportation corridors and population centers. It’s about 98 percent leased and consists of 342 buildings in 74 business parks.

About 85 percent of the portfolio is located across six submarkets in Phoenix, and the remaining approximately 15 percent is in Tucson.

READ ALSO: What’s Fueling the Rapid Expansion of Phoenix CRE

The portfolio’s tenant roster spans 22 industry segments, including e-commerce, logistic providers, manufacturing, business-to-business, and business-to-consumer uses. No single tenant occupies more than 1.5 percent of the leased square footage.

Equus noted that the portfolio’s strong historical occupancy and the short-term nature of its rent roll “provide for an immediate value expansion through mark-to-market of rental rates and lease duration expansion.”

In a prepared statement, Kyle Turner, an Equus partner and the director of investments, characterized the portfolio as “high-velocity,” in that it’s an asset management–intensive portfolio, due to the frequent lease turnover.

So, it should be no surprise that as part of the deal, Equus is taking on 26 individuals from the seller’s property management team to continue operation of the portfolio.

Turner; Christopher Locatell, senior vice president, dispositions; and Robert Butchenhart, vice president & head of the Western region, along with Laura Brestelli, vice president & director of capital markets, and Peter Russo, analyst, oversaw the transaction for the firm.

Hot market, in both senses

The metro Phoenix industrial real estate market is on a tear, likely to have a record year in 2021, following 2020 having been one of the region’s best years ever, according to a third-quarter report from Kidder Mathews.

About 29.2 million square feet of space (a record) is under construction, much of it speculative, and third-quarter sales volume hit nearly 200 deals totaling $1.2 billion (also a record). Unsurprisingly, the current average price per square foot of $143 is a record, too.

In an April recapitalization deal worth more than $1 billion, a joint venture between Equus and Partners Group, of Switzerland, sold an 8.6 million-square-foot portfolio of industrial assets to a new partnership of Equus and a large U.S. insurance company, reportedly AIG.

In May, Equus broke ground on an approximately 300,000-square-foot speculative logistics facility along I-85 in Kings Mountain, N.C., in the Charlotte area. Carolina 84 Logistics Center will accommodate either a single user or multiple tenants and should be completed by December.