Big Midwest Industrial Portfolio Up for Grabs

In one of the biggest industrial listings in the Midwest since the downturn, a partnership is offering a core portfolio that could attract bids of about $165 million.

The 12 warehouses, which encompass 2.4 million square feet, are 93% leased. At the estimated value of $68/sf, the initial annual yield would be about 7%.

Seven properties, totaling 2 million sf, are in a single Chicago business park - representing an unusually large package of available industrial space in one market. The others are in Milwaukee and Minneapolis.

The offering is expected to generate strong interest from conservative investors, especially domestic pension funds. Investors can bid on the entire portfolio or on all of the properties in any market.

Cushman & Wakefield is advising the seller, a partnership between Towne Investments of Milwaukee and Interstate Partners of Waukesha, Wis. Towne is the majority partner, and Interstate developed the properties.

Major tenants include ADT, Giant Bicycle, Illinois Tool Works, PODS, Shaw Industries and Staples. The average remaining lease term is five years.

The seven Chicago warehouses, in Northwest Business Park, have a 92% occupancy rate, exceeding the 88.6% average for the metropolitan area's 1.1 billion sf of industrial space. They range in size from 118,000 sf to 548,000 sf.

The two Milwaukee properties, in Ridgeview Corporate Park, total 177,000 sf and are fully leased.

There are three properties in Minneapolis: two fully leased warehouses at Rice Creek Corporate Park encompassing 186,000 sf, and a 117,000-sf warehouse at 3000 Ames Crossing Road. That property, in Boulder Lakes Business Park, is 93% occupied.

All of the warehouses were built since 1999. Six have ceiling heights of 30 feet, while the others have ceilings of 18-28 feet.

The biggest Midwest industrial deal of the year so far came in September. Artis Real Estate Investment, a Canadian REIT, agreed to pay AMB Property of San Francisco about $115 million, or $48/sf, for a 2.4 million-sf package in suburban Minneapolis.

A larger portfolio of core industrial properties heavily concentrated in the Midwest is being shopped by Pinchal & Co. of Houston. That 27-warehouse portfolio could fetch up to $350 million, or about $46/sf. The package includes properties in the Midwest and Southeast, with the bulk of its 7.7 million sf near Indianapolis.

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