Denver Industrial Portfolio :

Total square feet: 535,703 SF

1100 West 120th Avenue, Westminster, Colorado 80234

1150 West 120th Avenue, Westminster, Colorado 80234

1170 West 120th Avenue, Westminster, Colorado 80234

PROPERTY DESCRIPTION

ACQUISITION PROCESS
Panther and ATCAP acquired Park 12 Hundred (aka Denver Industrial) on December 22, 2016. The property was a collection of bulk warehouses (32’ clear height), light and flex industrial, distribution, and office facilities located in the Westminster Industrial submarket of Denver. The portfolio was ideally situated along I-25 and West 120^th Avenue in north Denver. The buildings were constructed in the 1960’s and consist of 535,703 square feet in suite sizes ranging from 20,000 SF to 150,000 SF. We acquired the portfolio for $41,500,000, or $77.47 PSF. The original operating plan called for 5- to 7-year hold with a projected sale at $62,517,000 or $116.70 PSF, applying a 7.00% cap rate.

PROPERTY HISTORY
As a result of its strong performance leading up to, throughout, and subsequent to, the first COVID pandemic, the industrial category has become a very popular segment in which to invest, attracting both large institutions and local sponsors. After experiencing four consecutive quarters of negative employment growth due to COVID, the Denver Industrial Market rebounded strongly in the 2nd quarter of 2021 with a 31.8% increase in leasing volume Y/Y and an 84.3% increase in sales volume Q/Q according to Cushman & Wakefield. Panther and ATCAP agreed that in order to maximize investor returns, the property should be included as part of a larger industrial portfolio to be marketed to institutional investors, who have the ability to pay premium valuations given they possess the lowest cost of capital.

Denver Industrial was a great performing asset out of the gates, quickly reaching 100% occupancy and making >9% distributions beginning with the first full quarter of ownership. Then, in September 2019, Frictionless World, a tenant in a 150,000 SF suite, filed for bankruptcy. Even though Frictionless World continued paying rent until it ultimately vacated in July 2020, its bankruptcy triggered a cash sweep provision with our lender and distributions have been suspended ever since. During this period, cash flow had been accruing in an escrow account that was released and distributed to investors at the time of sale (the accrued, unpaid preferred balance as a percentage of original investment projected at closing is 23.3%).

Denver Industrial was packaged for sale with 3 other investment portfolios by East Dil in July 2021. Panther is a part owner of 2 of the 3 other properties, specifically DFW 35/75 (700,790 SF, Dallas, TX) and ATCAP Fund I (2,110,005 SF – Dallas, Houston and Oklahoma City). The 4th property in the portfolio is a 181,688 SF property based in Houston and Austin known as Market Street where Panther is not involved. The total square footage of the offering was 3,529,423 SF. Prior to marketing the property for sale, we received Broker Opinions of Value (BOV) from East Dil on each of the underlying properties. The midpoint of the BOV for Denver Industrial was $77,500,000 or $145 PSF.

EXECUTION AND SALE

Panther investorsachieved an average annual return of 24.9% and a multiple on invested capital (MOIC) of 2.21x over the 4.9-year holding period. These returns compare to our original underwriting of 13-15% average annual return over a 5-7 year holding period. At closing, Panther LP’s received a distribution equivalent to 1.96x of their original investment (previous distributions amount to .25x original investment – thus the total of 2.21x).

This sale exceeded our pro-forma projections providing a 2.21x multiple to Panther FW Investors and an annual average return on investment of 24.9% over the 4.9 year holding period.