Chicago Shallow-Bay Portfolio _Property for Sale

Various locations

Chicago Shallow-Bay Portfolio

Portfolio description

Jones Lang LaSalle (Illinois) L.P. (“JLL”), as exclusive advisor to ownership, has been retained to market for sale the fee-simple interest in the Chicago Shallow-Bay Portfolio (the “Portfolio”). The Portfolio, comprised of nine (9) light industrial facilities totaling 390,779 square feet across various infill locations in the Chicago MSA, offers investors the opportunity to take advantage of a collection of assets ideally curated for today’s market conditions. The Portfolio is 92.4% contractually leased with 2.8 years of weighted average lease term and significantly below-market in-place rents, offering a 17.1% mark-to-market opportunity. Additionally, these shallow-bay assets and their suite sizes allow for significant rent growth without the supply-side pressure found in the bulk industrial space.

All 9 of these buildings are located in four of the highest-performing submarkets in the Chicagoland area, including the I-55 Corridor and North DuPage County. Further relevant to today’s market conditions, the Portfolio is offered with the benefit of in-place, accretive debt that is below today’s current rates. Coupled with favorable pricing in comparison to the exorbitant costs to replicate like-kind, shallow-bay assets, each of these points highlight the value available within this offering.

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Attributes

Number of buildings

Building area gross

390,779 sf

Year built

1992

WALT

2.8 years

Tenants

Occupancy

92.4%

Chicago Shallow-Bay Portfolio (7 Properties)

Media

Investment Highlights

Immediate Mark-to-Market Opportunity Supported by Recent Leasing

-The combination of 2.8 years of weighted average lease term remaining and a 17.1% mark-to-market opportunity through below-market rents provides an immediate path to cash flow growth across the Portfolio.

-Rents at suites rolling in analysis years one and two present a 20% and 30% mark-to-market opportunity, providing drastic near term cash flow growth. 63% of square footage will roll in the first three (3) years of a hold period, further accentuating the near-term ability to grow cash flows.

-2024 leases across the Portfolio have consistently out-paced in-place net rent equivalents, underscoring the ability to grow cash flows as leases expire.

Strategic Locations in High-Performing Submarkets

-The Chicago Shallow-Bay Portfolio submarkets are outperforming the greater Chicago Industrial Market across all key metrics, demonstrating the desirability of these locations.

Accretive In-Place Debt

-Current ownership has locked rate on accretive, assumable Life Company debt that would not be available in the market today. The locked interest rate of 5.86% is approximately 80 basis points lower than where fixed-rate debt would price in today's environment.

-The assumable in-place debt was sourced from an insurance company and features full-term intrest only payments with no recourse.

-Accretive in-place financing will substantially boost after-debt cash outflows in the near-term.

Highly Functional Assets at a Below-Replacement Cost Basis

-In an era where inflation has pushed material and labor costs to unprecedented highs, the Chicago Shallow-Bay Portfolio offers investors an opportunity to enter a tight Chicago industrial market at a significant discount to replacement costs.

-JLL estimates that the Chicago Shallow-Bay Portfolio is offered at a 40% discount to today's replacement cost.

-The Portfolio has benefitted from a chain of institutional ownership that has maintained the Properties to top-line standards.

Diversified Cash Flow Stream

-As of 9/1/2024, there are 39 distinct tenants with contractual lease commitment across the Portfolio, with no single tenant accounting for more than 6.8% of Portfolio Square Footage.

-JLL has grouped the tenancy into 28 distinct industries, with no single industry accounting for more than 8.6% of leased square footage.

-Industry and tenant diversity insulates the Portfolio from segment-specific economic downturns and reduces the Portfolio's risk profile.