Gladstone Acquires Industrial Portfolio in Detroit Area
The deal, inclusive of assumed debt, calculated out to an initial cap rate of 7.5% and an average GAAP cap rate of 8% and brings the company’s portfolio in the Detroit area to a total approaching 1 million square feet.
DETROIT—Gladstone Commercial Corp. has acquired two industrial buildings in Auburn Hills and Sterling Heights for $21.3 million in an UPREIT transaction.
The deal, inclusive of assumed debt, calculated out to an initial cap rate of 7.5% and an average GAAP cap rate of 8% and brings the company’s portfolio in the Detroit area to a total approaching 1 million square feet.
The two buildings acquired by the McLean, VA-based REIT totals 218,703 square feet and the properties sport a weighted average lease term of 10.5 years.
“This portfolio acquisition expands our industrial presence in the Detroit Area, where we now own five industrial assets totaling over 900,000 square feet. The Detroit area industrial market fundamentals are favorable, with a vacancy rate below 5%, and long-term trends of positive absorption and rent growth,” says said Matt Tucker, senior managing director of Gladstone Commercial. “This investment should provide accretive, long term returns to our investors, while increasing our industrial concentration and weighted average lease term for the Gladstone Commercial portfolio.”
The 144,400-square-foot Auburn Hills property is 100% occupied under a 10.2-year lease by Dana Driveshaft Manufacturing, LLC, a subsidiary of Dana Inc., which provides drive and motion products, sealing solutions, thermal-management technologies, and fluid-power products to vehicle and engine manufacturers in North America, Europe, South America, and Asia Pacific.
The 74,303-square-foot Sterling Heights property is 100% occupied under a 10.9-year lease by TransForm Automotive, LLC, a subsidiary of Means Industries, Inc., which specializes in various components and assemblies for transmission production utilizing proprietary stamping, forming, flow forming, machining, laser-welding and assembly processes. Both Dana Inc. and Transform guarantee the leases.
Bob Cutlip, president of Gladstone Commercial, says the deal is the company’s first UPREIT transaction. As of Sept. 20, Gladstone’s real estate portfolio consisted of 99 properties located in 24 states, totaling approximately 11.6 million square feet.