Westcore Grows in the West

Mountain West Portfolio, 2140 S. 7th Ave., Phoenix. Image courtesy of Westcore

Westcore continues to expand its holdings with the addition of the Mountain West Portfolio, a group of seven properties that increases the industrial real estate investment company’s presence in Phoenix and Denver. The fully leased portfolio totals approximately 684,400 square feet.

Westcore isn’t disclosing the identity of the seller. However, Mountain West Portfolio includes a roughly 460,200-square-foot collection of four industrial facilities in Phoenix that last changed hands in 2019, when Blackstone acquired it for approximately $60.7 million as part of a larger 68-property portfolio purchase from TA Realty. The predominantly multi-tenant Phoenix assets, featuring nine flex buildings built between 1996 and 2002, include 2110-2140 S. 7th Ave., 4401- 4409 E. Baseline Road, 3710 E. University Drive and 2501 W. Phelps Road. TA Realty had purchased the four Phoenix properties in a transaction in 2015 for $42.2 million.

READ ALSO: While Supply Chain Slows, Logistics Real Estate Moves Fast: Report

In Denver, Westcore’s acquisition of Mountain West Portfolio provided the company with three assets totaling approximately 224,200 square feet. Like the Phoenix facilities, the three single-tenant buildings in the Mile High City are sited in infill locations and offer upside potential via lease rollover in a market with meaningful rent growth. Many of the assets in the Mountain West Portfolio will undergo renovations under Westcore’s ownership.

Good locations

The industrial markets in both Phoenix and Denver, like those in most major metros across the U.S., are thriving. “The Phoenix industrial market is on pace to outperform last year’s record level of construction, net absorption and vacancy with no sign of slowing down heading into the final quarter of 2021,” according to a third quarter 2021 report by Lee & Associates. Buoyed by strong demand, the quarterly vacancy rate dropped to an all-time low of 5.5 percent and the 12-month positive net absorption reached nearly 16 million square feet, a figure that is nearly twice the 10-year average.

Denver saw its quarter-over-quarter-vacancy rate drop to 6.4 percent and its 12-month positive net absorption skyrocket to nearly 3.5 million square feet. “The Denver industrial market continues to fire on all cylinders,” according to the Lee & Associates report. “With steadily increasing lease rates, strong absorption and construction at historical highs, the Denver market is poised to see strong metrics in the coming years.”

While Westcore represented itself in the Mountain West Portfolio transaction, the company turned to Jeff Conrad of Lee & Associates, Jackie Orcutt of CBRE’s Phoenix office and Drew McManus of Cushman & Wakefield’s Denver office for local market expertise. Cushman & Wakefield’s Will Strong and Greer Oliver provided representation for the seller.

Fuel for growth

The Mountain West Portfolio acquisition follows a long list of Westcore purchases in 2021. The company kicked off the year with a major addition to its holdings, a 17-property, 4.1 million-square-foot national portfolio purchased from USAA Real Estate in January.

Westcore’s transaction goals benefited from a big boost in June when the company landed a supplemental $500 million equity capital commitment from the Arizona State Retirement System. The added investment, coupled with ASRS’s previous investment and capital commitments from two other life insurance entities, left Westcore with an aggregate $1.3 billion in institutional equity capital commitments to support its expansion endeavors.