Tuesday Morning Sells Industrial Portfolio As It Exits Bankruptcy
A joint venture between M2G Ventures and Pennybacker Capital has acquired the portfolio and the retailer’s headquarters office.
Retailer Tuesday Morning has sold its 1.2 million-square-foot industrial distribution portfolio to a joint venture between M2G Ventures and Pennybacker Capital. The deal also included the company’s 105,000-square-foot headquarters office in Dallas, Texas.
The deal closed as Tuesday Morning exited its Chapter 11 Bankruptcy. The retailer entered into bankruptcy in May 2020. According to a public announcement in early January, Tuesday Morning left the bankruptcy with 490 or its 687 stores and a $110 million lending facility backed by J.P. Morgan, Wells Fargo and Bank of America. In September, the retailer’s sales were down 28% compared to pre-pandemic levels and net cash flow was negative in October and November, according to reporting from RetailDive.
The sales of Tuesday Morning’s industrial portfolio and corporate office has helped to unlock capital for the retailer. “We are pleased to partner with Pennybacker to unlock value for Tuesday Morning, while significantly growing our urban industrial portfolio,” said Jessica Miller Essl, co-founder of M2G Ventures, said in a statement. M2G Ventures and Pennybacker Capital are focused on value-add urban-infill industrial development. The joint venture plans to continue to grow its portfolio in the Dallas-Fort Worth market this year.
This is one of the single largest industrial transactions in the Dallas-Fort Worth market recently. The five total properties in the industrial portfolio are located on 46.7 acres and located less than 20 minutes from both Downtown Dallas and DFW International Airport. The surrounding submarket is among the most active in the country with 95% occupancy and access to over 3.5 million people within a 30-minute drive-time.
The strong demand in the DFW market has also fueled a healthy construction pipeline. From fourth quarter 2019 to third quarter 2020, 33.7 million square feet was delivered, more than any other 12-month period. Notable recent projects include the Gateway Logistics Center, a five-building 1.4-million-square-foot class-A industrial park located near the south entrance of Dallas-Fort Worth International Airport.
The construction activity isn’t new. For the last five years, Dallas Forth-Worth has delivered more than 20 million square feet of new construction activity due to the market’s strong fundamentals and sustained demand. These construction starts continue to backfill the development pipeline after the largest 12-month period of deliveries. Even during the pandemic, leasing activity only paused momentarily before picking up again in the third quarter, surpassing the historical average for the last two years.