Arlington Industrial Portfolio :
Total square feet: 455,331 SF
605 109th Street,
Arlington, Texas 76011
We acquired Arlington Industrial with Fort Capital in an off-market transaction on November 21, 2019, for $23,500,000 ($51.61 PSF), or an all-in acquisition price of $61.21 PSF. Our plan was to grow its below market rents and maintain occupancy (96% at takeover) with a planned disposition at the end of year 5 at $81.49 PSF (6.25% cap rate). This investment was underwritten to deliver a 16-20% average annual return and a 1.85x multiple on invested capital (MOIC).
Panther, with the sponsor, Fort Capital, acquiredthe 22.5-acre, 455,331 square-foot infill business park located within the core of Great Southwest submarket in DFW, TX. Within GSW, the property is located in the Lower GSW area (south of Interstate 30) where vacancy rates were 2.7% with only 155,000 SF of current construction. Lower GSW sits directly east acrossSH 360 from the Arlington Entertainment District which includes Six Flags Over Texas, Texas Live!, Globe Life Park (Texas Rangers) and AT&T Stadium (Dallas Cowboys). The Portfolio consisted of ten buildings with a total of 20 units ranging from 5,520 SF to 75,545 SF, and averaging 22,757 SF of core light industrial space situated on 20 contiguous acres of land (and 2.5 additional acres one block to the west). This submarket is one of the highest performing submarkets in DFW as evidenced by the historically low vacancy of 3.7%. Total square footage is 455,331.Then, in mid-2020, we were able to acquire a 35,000 SF neighboring property, Avenue E Industrial, for $53.57 PSF, using additional loan proceeds from our lender. This acquisition brought our total square footage up to 489,742 SF.
EXECUTION AND SALE
In early March of 2021 we received a BOV from Jones Lang LaSalle (JLL) which estimated that our Arlington Industrial Portfolio (which also included an additional Panther/Fort Capital property: 109th Street Industrial), was worth an estimated $84 PSF at the midpoint estimate of the BOV. The dramatic increase in price in such a condensed period was the result of a large amount of institutional capital looking to invest in the DFW industrial market combined with a limited amount of supply on the market and material absorption. The bid of $92.06 PSF after a 1.66-year holding period exceeded Panther’s original underwriting which called for a sale at the end of year 5 at $81.49 PSF.
This sale exceeded our pro-forma projections providing a 1.66 multiple to Panther FW Investors and an annual average return on investment of 40.14% over the 1.66 year holding period.