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JERSEY CITY-Marcus & Millichap Real Estate Investment Brokerage Co. has brokered the sale of locally based Preferred Freezer's 12-property refrigerated warehouse portfolio to General Motors Acceptance Corp. for $261 million. The sale-leaseback transaction, which was brokered by vice president of investments Steven Regenstreif and a team of local brokers, is one of the industry's largest net-leased portfolio transactions completed in the past year.
"They [Preferred Freezer] needed to raise additional capital for additional growth," Regenstreif, who is based in Marcus & Millichap's Encino, CA office, tells GlobeSt.com. "They're over 100% occupancy and needed to grow. There's a large demand for their services." The portfolio contains 12 individual single-tenant sites totaling approximately 1.6 million sf and including approximately 64 million cubic feet of refrigerated space. The sites range in size from 70,100 sf to 243,400 sf and each site is located in close proximity to ports and major highways.
GMAC plans to re-sell the assets on an individual basis and that process is already under way with several listings through Marcus & Millichap. Under the sale-leaseback arrangement, Preferred will lease the properties for 25 years with subsequent five-year options.
Bernard J. Haddigan, managing director of Marcus & Millichap's Net Leased Properties Group, explains that this type of single-tenant sale-leaseback is the equivalent of a bond. "Investors are attracted to the predictable cash flow and stable income stream, as well as the ease of management of such properties." With the bond-type lease, the lessee is responsible for all costs and expenses relating to the property and its operation, maintenance and repair.
"The transaction was a win-win situation for both the buyer and the seller," Regenstreif adds. "The company had a great story, but not a great net worth." He says four lenders put up the funds for the whole portfolio. "The real estate is irreplaceable."
Preferred Freezer is the seventh-largest Public Refrigerated Warehouse company in the nation and is the dominant PRW provider serving the frozen seafood sector, which accounts for approximately 80% of the firm's business. The company was founded in 1989 by president and CEO John Galiher.
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