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VOL. 129 | NO. 48 | Tuesday, March 11, 2014

Exeter Property Group Acquires Industrial Portfolio

By Amos Maki

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Exeter Property Group has acquired a 4.4 million-square-foot industrial portfolio – including four properties in Memphis – for $132 million.

Exeter recently acquired the properties located in Memphis, Nashville and Columbus, Ohio, from LNR Property LLC, a special servicer appointed to the portfolio upon its transfer from London-based Strategic Realty Advisors Ltd. in June 2013.


LNR was represented in the transaction by Andrew Phillips of Colliers International Memphis and Steve Timmel of Colliers’ Cincinnati office, along with assistance by local industrial market experts Andy Cates in Memphis and Bill Baumgardner in Columbus.

The four Memphis buildings included in the sale are the 625,000-square-foot building at 5200 Transportation Drive occupied 100 percent by Trane, the 550,000-square-foot building at 6005 Freeport occupied partially by Kuehne & Nagel, the 600,000-square-foot building at 3399 E. Raines Road occupied 100 percent by Philips Electronics North America and the 337,655-square-foot building at 4550 Swinnea Drive occupied partially by Ingram Micro.

“The Memphis properties work extremely well with Exeter’s local holdings as they already own neighboring properties to both the Philips Electronics building as well as the Ingram Micro building on Swinnea,” said Phillips. “Combined with the Trane and Kuehne & Nagel buildings in the Chickasaw industrial park, the Memphis portion of the portfolio is a great fit.”

The sale of the eight-building industrial portfolio, formerly known as StratREAL Industrial Portfolio II, points to several national and local trends: a recovery in Class A industrial pricing, the dwindling number of distressed Class A properties available and the shrinking supply of Class A space in established markets.

The Memphis industrial market is tightening and finding substantial, stable Class A industrial space is becoming more difficult.

“Opportunities to acquire a critical mass of value-added, Class A product continue to decline so it wasn’t surprising that we had significant interest from many of the industry’s largest players and were able to move the portfolio very quickly,” Phillips said.

The Memphis industrial market remained in the black in 2013 with year-end net absorption of 3.2 million square feet, according to Cushman & Wakefield/Commercial Advisors. The overall market vacancy rate dropped 0.4 percentage points from the previous year to 15.1 percent.

Phillips said that because of the tight market, the portfolio received strong attention from prospective buyers.

“This was one of the highest quality industrial portfolios to become Real Estate Owned nationally and was being tracked by most of the major industrial players,” said Phillips. “As such, the seller was able to be aggressive with not only its pricing, but also with the timing of sale.”

While DeSoto County has been outpacing the rest of the local industrial market, Cates said the portfolio sale demonstrates that the Southeast submarket, with its established infrastructure and proximity to other Memphis industrial parks, is still inviting for investors.

“All of the Memphis buildings in the StratREAL portfolio were in the Southeast, reinforcing the fundamental soundness of the largest Memphis area industrial submarket,” said Cates.

Another trend that impacted the sale is the dwindling number of Class A distressed properties.

“There are fewer distressed properties available, particularly distressed portfolios of Class A industrial space,” said Cates. “As a result, the sales price, while still somewhat below market, was more competitive than we'd have expected to see as little as six to 12 months ago.”

PROPERTY SALES 61 262 16,169
MORTGAGES 28 132 10,054
BUILDING PERMITS 88 424 38,360
BANKRUPTCIES 36 92 7,564