SEGUIN, TX-ElmTree Net Lease Fund II has added a 300,000-square-foot industrial facility to its portfolio, paying $22.6 million in the process. The St. Louis buyer now owns a brand-new third-party logistics facility in this San Antonio suburb, which is leased to Caterpillar Inc.'s third-party logistics provider FCA LLC through a 10-year deal.
The just-completed facility is situated on 27 acres near Caterpillar's primary engine assembly operations on Kingsbury St. According to Joseph C. Yiu, chief investment officer and managing principal of ElmTree Funds LLC, the appeal of the property involved upside and the fact that it's a mission-critical property for Caterpillar.
"One of the real reasons we liked the deal is that there's room for an additional 100,000 square feet of expansion," Yiu tells GlobeSt.com. "We believe Caterpillar will ultimately expand during the period of the lease."
Yiu says this assertion is based on the fact that the model of logistics facility near assembly operations is where specialized manufacturing in the US is headed. "The way Caterpillar is set up now is the way all specialized manufacturers will be set up moving forward," Yiu explains. "Because of increase in fuel costs and the move toward consolidation and efficiencies, more companies are putting warehouses and logistics facilities next door to manufacturing plants, so everything is there." This, he adds, is where the mission-critical function takes place; the need to ensure that assembled engines are shipped out in a timely fashion, and that raw materials can be received and sent to the plant up the road.
Yiu tells GlobeSt.com that the Seguin transaction was off-market, the result of what he termed "one of our strong relationships." "We worked with a local Texas developer on acquiring that property upon completion of construction," he adds. "This is brand-new."
ElmTree Funds is no stranger to Texas; the company currently owns facilities near the Dallas-Fort Worth International Airport. Yiu says ElmTree Funds is examining a handful of deals in Texas, including a potential build-to-suit opportunity that could close either later this year or during Q1 2014. "Given the pipeline in Texas, between now and Q2 of next year, we could be looking at investing another $75 million to $100 million in real estate," he adds.
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