Oak Street Funds $90M Manufacturing Facility in Tennessee

Rendering of Portobello America’s build-to-suit facility in Baxter, Tenn.

Oak Street Real Estate Capital has agreed to fund the construction of and then purchase a $90 million manufacturing facility well east of Nashville. Avison Young’s Capital Markets Group negotiated the build-to-suit, sale-leaseback deal.

The 965,000-square-foot facility is in Baxter, Tenn., and will be used by Portobello America, a business unit of Brazil’s Portobello Group, as a ceramic-tile manufacturing plant, warehouse, U.S. headquarters office and showroom.

Portobello had chosen Avison Young principals Timothy Hall, James Hanson and Tom Viscount to raise the capital to build the facility.

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Portobello America purchased the land and sought capital for construction of the manufacturing facility, which began late last year.

Oak Street bought the property and is funding construction of the new facility. Portobello will execute a 20-year lease when construction is complete, which is expected in late 2022.

Portobello Group is Brazil’s largest tile manufacturer and distributor. It estimates that the Tennessee facility will create more than 200 local jobs and generate about $150 million in annual revenue, once full capacity is reached, which is expected to occur by 2026.

The 92-acre site is situated on I-40, about 70 miles east of Nashville and in the Cookeville Micropolitan Statistical Area. It’s in Putnam County, reportedly a national center for ceramic tile manufacturing because of the region’s significant natural supplies of clay and feldspar.

Tile mecca

Portobello was an attractive sale-leaseback candidate in part because the company “is a dominant player in the global and U.S. tile industry, so investors value their credit under the leaseback,” Hanson told Commercial Property Executive. In addition, the facility will be state-of-the-art, with the latest technology for tile manufacturing and sustainability.

He added, “Tennessee is an extremely attractive state for new business development and job creation, so the industrial market there is very attractive to investors.”