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Wharton Industrial Signs Lease for Entire 283,000 SF Last-Mile Warehouse in Philadelphia, PA

Wharton Industrial Acquires Last-Mile Warehouse in Philadelphia, PA

Philadelphia Business Journal Sep 10, 2019 — An affiliate of Wharton Equity Partners along with Walton Street Capital Partners has acquired 2400 Weccacoe Ave., a 283,500-square-foot property in Philadelphia that was once occupied by Hyundai Rotem, a South Korean company that made train cars for SEPTA.

The sale price was $16.75 million, according to property records. The building on 13.5 acres was vacant at the time the Wharton partnership bought it. The property has been in limbo for some time. Hyundai Rotem had signed a 10-year lease on the space with two five-year extensions in 2007 but ended up wrapping up operations and emptying out of the building last year.

The Wharton affiliate, Wharton Industrial, acquired the property from Rimas Properties, a Philadelphia real estate company that had purchased it in July 2006 for $7.6 million from Everett Novak of Unique Industries, according to Philadelphia property records. Rimas then leased it to Rotem.

Wharton has big plans for the property. It has started a $10 million redevelopment of the building that includes tearing out the rail beds, installing a new roof, leveling interior floors, and upgrading loading docks among other upgrades. The renovations are expected to be completed in early 2020.  See video.

The renovations are part of Wharton’s plans to seize on market forces catering to the growth of online retail. The property has access to interstates 95 and 76, Philadelphia International Airport, PhilaPort and the Packer Avenue Marine Terminal. It is also adjacent to Center City.

The new owner plans to rebrand 2400 Weccacoe as SoPhi Logistics Center and will try to attract tenants who want last-mile distribution or even last-step distribution. UPS has for years operated a distribution center adjacent to the property.

“There really hasn’t been something to serve Center City,” said Michael Mullen, who along with Patrick Green of CBRE Inc. arranged the sale to Wharton. Mullen, Green and Jake Terkanian are overseeing leasing the property.

Industrial property is a relatively new focus for Wharton. “Our business model has always been looking around the corners and figuring out what is next,” said Peter C. Lewis, president of Wharton Equity.

In 2012, the New York real estate company began what ended up becoming a $400 million investment in multifamily properties in secondary markets between Boston and Miami where apartment real estate wasn’t as expensive to buy compared with primary gateway markets. “Our belief was that in a healing economy, the one place we know will be successful is multifamily because people need a place to live,” Lewis said. “The cost of debt was the same if you were buying in Greenville or New York City.”

Once Lewis sensed the multifamily sector was getting overbought, the company sold its portfolio and began in 2017 to invest in industrial properties.

“The big feeling is industrial is undergoing a once-in-a-generation change because of the affect of e-commerce,” Lewis said. “Because of Amazon and Amazon Prime, which moved from two-day to one-day delivery, the question became how are goods going to get into cities that quickly?”

That means buying properties next to major populations to take advantage of these companies and distribution, an area the company has been focused on ever since.

“I think in many ways this property is emblematic of what a last-mile distribution facility will be in the future,” Lewis said. “A tired, old warehouse that had another use.”

During the 1990s, Unique Industries, a manufacturer of party supplies, owned the building and used it for its operations. Unique sold it to Rimas and Hyundai Rotem was the last company to occupy 2400 Weccacoe when it was awarded a $274 million SEPTA contract in 2006 to build rail cars for SEPTA and other transit agencies.

The company arrived in Philadelphia with great fanfare, promising jobs and a long tenure in the city. In April 2006, Pennsylvania officials had announced Hyundai Rotem would relocate its U.S. headquarters to Philadelphia from Englewood Cliffs, New Jersey.

At the time, the company received a $5 million loan through the Citizens Job Bank, a public-private partnership created between Pennsylvania and Citizens Bank to help job growth within the state. It also got another $2.2 million from the state in financial incentives to create about 215 jobs. It went downhill from there.

The building had been constructed in the 1960s and 1970s and Rotem spent in excess of $20 million renovating it. Rotem ultimately produced defective rail cars for SEPTA and closed.

Wharton Urban Finalizing Development Plan for 400,000 SF Mixed Used Project in Bay Harbor, Miami

Featured in The Real Deal: New York City Real Estate News

Wharton Equity Partners, Investment Partner Buy Taplin Property in Bay Harbor Islands for $20M

Plans call for a mixed-use project with Class A offices, boutique retail space and luxury rentals
By Ina Cordle

Wharton Equity Partners, through its Wharton Urban platform, and Northwood Ravin just bought the late Marty Taplin’s office building and property in Bay Harbor Islands for $20.25 million, with plans to develop a mixed-use project, The Real Deal has learned.

The site, at 1177 Kane Concourse, encompasses 1.82 acres of mostly vacant land and a surface parking lot, with an existing, 21,078-square-foot, three¬ story office building built in 1953. An additional 0.26-acre waterfront parcel at 9600 West Bay Harbor Drive also has an asphalt parking lot.

David E. Eisenberg , CEO of Wharton Equity Partners, told TRD that the joint venture’s preliminary plans are to develop a mixed-use project with Class A offices, boutique retail space and luxury apartment rentals. The exact size is not yet known, but the property is zoned B-1, allowing up to 65 feet, or about five stories of commercial and residential uses. The additional parcel is zoned Gateway, allowing for multifamily and apartments.

The seller is the 1177 Kane Concourse Partnership, owned by the Taplin family, which bought the property in 1994. It was tied up in a foreclosure for years, documents show, until the mortgage was paid off in Aug. 30, a few months after Taplin’s heirs sold the Sagamore Hotel for $63 million in April.

Eisenberg said he and his Wharton Equity partner, Peter C. Lewis, have had their eyes on the site for years. “We had met with Marty Taplin several times over the years to talk to him about either purchasing or joint venturing the development of this property,” Eisenberg told TRD.

“Its a huge, largely undeveloped parcel of commercially zoned property nestled between several very affluent communities,” he said.

The site’s proximity to Bal Harbour Shops also adds to its appeal, said Eisenberg, who envisions a gourmet market and boutique fitness facility as part of the tenant mix. “A similar type of retail to Sunset Harbour: a community oriented destination … which is something that doesn’t exist in this market.”

Wharton Equity, a real estate investment firm with offices in Miami and New York City, has been active in the Miami market in recent years. The firm, in partnership with Mack Real Estate Group. has just completed Eve at the District, a 500,000 square-foot, mixed-use project at Northeast 36th Street and Northeast First Avenue on the edge of the Design District and Midtown. Wharton also owns a 2.3-acre development site in the heart of Miami’s Central Business District, zoned for more than 2 million square feet of mixed-use development, including more than 2,200 residential units. And the firm also owns and is renovating the Sheraton Miami Airport Hotel in partnership with Hersha Hospitality and a New York private equity fund.

Northwood Ravin, founded by David Ravin, is a development, construction and property management firm that focuses on the Southeast. It has offices in Charlotte and Morrisville, North Carolina and Tampa, according to its website.

Bay Harbor Islands, a once sleepy town, is surging with new development. At least 26 new projects are in some stage of development on the neighborhood’s two islands, many of them boutique condo buildings and townhouses, including Sophie, Sereno, Akua, Bay Harbor Gardens, Pearl House and Le Jardin.

Wharton Urban Gains Control of 2 Million Square Foot Development Site in Downtown Miami

Featured in GlobeSt.com Daily News

 

Wharton Equity Partners Acquires Key Development Site

MHN Exclusive

 

By Jon Jordan

 

Miami —Wharton Equity Partners of New York City, through its Wharton Urban platform, reports it has taken title to one of the largest remaining undeveloped parcels of land in the Miami CBD, a full city block comprised of approximately 2.2 acres.

The firm states that the property was acquired through a deed in lieu of foreclosure on a note that Wharton Equity purchased from IberiaBank earlier this year. The note was acquired with an institutional partner in an “all cash” transaction that closed in under 30 days from contract signing. No financial terms of the transaction were released.

The partnership has begun evaluating options for the “Burdines Site” property, including development, joint venture and/or sale. The property was approved for a 2.2-million-square-foot mixed-use project designed by Pei Partners (IM Pei) and Miami-based Oppenheim Architecture+Design. The prior approval included residential, hotel, retail and office components as part of the project, company officials state.

The property is within a few blocks of a number of high-profile projects that are under construction including Met 3, a mixed-use project consisting of a new Whole Foods Market at street level with 462 high end residential units, and Brickell CityCentre, a nearly 4-million-square foot mixed-use project located in Mary Brickell Village.

“We are a great believer in the long-term prospects of South Florida, and in particular Miami, and expect to acquire other major assets in the market in the coming months,” states Peter C. Lewis, chairman of Wharton Equity Partners.

David E. Eisenberg, CEO of Wharton Equity Partners adds, “We viewed the note purchase as a unique opportunity to control one of the most significant undeveloped properties in downtown Miami at a time when demand for land is rising and remaining land is scarce.”

 

Wharton Industrial Acquires a 1.1 Million SF Portfolio of 32 Last Mile Warehouses in Southern New Jersey

Bloom Organization deals away final holdings in
South Jersey with sale of 32-building portfolio

After decades of developing and leasing industrial properties in South Jersey, The Bloom Organization has dealt away its last holdings in the market with the sale of a 32-building, 1.16 million-square-foot industrial portfolio in Pennsauken.

Terms of the deal, which closed Friday, were not disclosed. The sale represents a “significant changing of the guard” in the area, said Marc Isdaner of Colliers International, who brokered the deal along with Ian Richman.

“The Bloom Organization was a quality landlord that had holdings basically all over Southern New Jersey and was regarded as a high-quality landlord that was dedicated to tenant service,” Isdaner said.

The 32 properties total 1,164,939 square feet and are 100% leased to 49 tenants including Nestle Waters, PepsiCo’s SodaStream and Sprint. They compose both the Twinbridge Industrial Park and Veterans Industrial Park in Pennsauken and represent about one-third of all investment properties in Pennsauken, an in-demand market given its location between major transit arteries including Rt. 73, Rt. 130, I-295, and both the Betsy Ross and Tacony-Palmyra bridges into Philadelphia.

That means the buyer, a joint venture between New York-based Wharton Industrial and an investment fund tied to Walton Street Capital, are now the largest industrial landlord in Pennsauken, the brokers said.

“This was a very desirable portfolio of buildings,” Isdaner said. “It’s hard to find quality buildings in an excellent location in quantity.”

The purchase gives Wharton Industrial instant scale and significantly increases its presence in the market. It made a major entrance into the area last fall when it bought a 283,500-square-foot property at 2400 Weccacoe Ave. in Philadelphia for $16.75 million and invested $10 million in redeveloping it. Last month, the Philadelphia Business Journal exclusively reported it leased the building to Amazon for a same-day delivery facility.

The main focus of Wharton Industrial’s investments has been well-located, in-fill industrial properties on the East Coast and in the Southeast, including Florida.

“We are extremely excited to be acquiring this special portfolio which has a heritage of excellence cultivated by the Bloom Organization over the years,” Peter C. Lewis, president of Wharton Industrial, said in a statement. “We are fully committed to following in their footsteps by providing a superior product and level of service.”

Bloom, a family-owned organization, has slowly pared down its holdings over the past 10 years following the death of its patriarch, Steven Bloom, in 2008.

Bloom developed both the Twinbridge and Veterans industrial parks in the 1980s and 1990s, meaning the properties are more modern and desirable than the mid-century industrial buildings that make up a large part of Pennsauken’s market. Their 21-foot ceilings are higher than most industrial product in Camden County, Richman said, allowing tenants to store more product in the same square footage. Twinbridge properties include every building on Twinbridge Drive and several on Remington Avenue, and Veterans’ 12 buildings are located on Thomas Busch Highway, Hylton Road and National Highway.

As part of the purchase, Wharton Industrial plans on rebranding the Veterans Industrial Park as Twinbridge West and updating common areas, including new signs and landscaping.

Colliers was tapped to handle all leasing and property management for Wharton industrial. The properties are fully occupied at the moment, but Isdaner said 16,000 square feet will become available in the portfolio in September.

While the rise of e-commerce has driven demand in the industrial market both locally and nationally, Isdaner said the Twinbridge and Veterans industrial parks are mostly occupied by service business, light manufacturing and some warehousing.

“It’s the bread and butter of industrial real estate, not the headline-grabbing e-commerce deals,” he said.

Wharton Industrial Announces 1 Million SF Spec Warehouse 100% Leased to Major Clothing Brand

Wharton Industrial Announces 1 Million SF Spec Warehouse 100% Leased to Major Clothing Brand

Atlanta, GA. – (March 29, 2019) Wharton Industrial announces they have leased their 1 Million square foot development project in Atlanta, GA to PVH Corp., the company behind clothing brands including Calvin Klein and Tommy Hilfiger.  The recently-completed building was developed and built by Wharton Industrial, Red Rock Developments and an affiliate of Starwood Capital Group.

PVH Corp. has signed a 20-year lease at the distribution building, which is part of an industrial real estate project along Interstate 85 just south of Atlanta called Shugart Farms. Jones Lang LaSalle provided advisory services to the owners.

PVH will invest $77.6 million into the distribution center and warehouse.  The company will create 575 jobs, according to a release. In a statement Thursday, Gov. Brian Kemp’s office said the project will bring more business to the Port of Savannah.

PVH, formerly known by the brand Phillips-Van Heusen, has six divisions including Calvin Klein North America, Tommy Hilfiger North America and Heritage Brands Wholesale.

Wharton Industrial is a platform company of Wharton Equity Partners, a New York City-based real estate investment firm formed in 1987. The company has extensive experience acquiring, developing and operating all asset classes, including having recently purchased in excess of $450 million of multifamily properties primarily in the southeast US through its affiliate, Wharton Residential.  Wharton Industrial currently has 3 million square feet under construction and $100 million of existing buildings in the pipeline.

Wharton Residential Sells over $300 Million of its Multifamily Properties

Wharton Residential Sells over $300 Million of its Multifamily Properties

WEP harvests gains from properties acquired post-2012 after increasing values through extensive upgrade programs

NEW YORK/PRNewswire/ — Wharton Residential, a Wharton Equity company, announces the completion of the sale of a 900-unit portfolio in Central Florida it acquired with partners in 2012. The sale caps off a productive 2016 for Wharton Residential in which the firm sold over $300 million of multifamily properties which it purchased over the last few years in partnership with institutional investors. “Starting in 2012, we saw an opportunity to acquire properties in strong secondary markets, and purchased approximately 6,500 units during this time which we are now in the process of selling to recognize gains. To date, these sales have resulted in weighted average IRR’s well in excess of 20%,” notes Peter C. Lewis, President of Wharton Equity.

Wharton Equity, founded in 1987, and with offices in New York City and Miami, has a history of acquiring real estate slightly ahead of the curve and then selling when the markets ripen. “The driving investment philosophy of our firm for 30 years has been to capitalize on trends across all asset classes and strategies. Having been through a number of cycles, we felt strongly that multifamily assets would lead real estate out of the downturn, and decided to focus on secondary markets to reap the greatest arbitrage between cap rates and the cost of debt,” states Lewis.

The Florida portfolio is emblematic of Wharton Equity’s investment style as the firm was presented with the transaction from a REIT when another buyer dropped out of contract and moved quickly to acquire the assets in conjunction with a New York City hedge fund and property management firm. After adding value through improved operations, and upgrades the partnership was able to raise income and sell the properties at a substantial gain.

“Although the environment has gotten more challenging, we believe there are still opportunities to purchase properties today and are actively looking for assets, particularly those catering to workforce housing,” adds Lewis. Along these lines, Wharton Residential is about to close on a multifamily property in Nashville, TN that it is acquiring from the original developer. “This is exactly the type of property we want to be purchasing right now where we can completely transform an asset, located in a burgeoning market, which caters to middle income families. Within the next six months, we will expand our sights to include Class A properties in strong markets where we believe there will be downward pressure on pricing due to softening from over-building. This is in addition to our development activities, mostly in Florida and New York” he notes. In December 2016, the firm acquired a 2-acre property in the Bay Harbor/Bal Harbour sub-market in partnership with Northwood Ravin Investors where it plans on developing a mixed use project comprised of residential rentals, office and retail.

Wharton Equity’s Peter C. Lewis is Betting Big on South Jersey’s Industrial Market

Why a New York Real Estate Investor is Betting Big on South Jersey’s Industrial Market

In his more than 30 years working in the real estate industry, Peter Lewis hasn’t seen anything like it.

The president and founder of New York-based real estate investment firm Wharton Equity Partners has owned everything from hotels and apartment buildings to self-storage facilities over the past few decades, but the shift currently hitting the industrial real estate world is unlike any he’s encountered.

“In my career, I’ve never seen an asset class like industrial be so affected by the change in technology,” said Lewis, who has lectured on the topic and future of the real estate industry at Columbia Business School.

That’s one of the reasons why his firm has doubled down on industrial properties and on Friday teamed up with an investment fund tied to Walton Street Capital to buy up a sprawling 32-building industrial portfolio in Pennsauken for an undisclosed sum. The properties, about one-third of all investment properties in the township, are in the heart of one of South Jersey’s most in-demand areas – a demand he thinks will only climb.

“This is early. We are so early in this. We’re going to look back and view this as the first inning of what’s happening in the transformation of industrial,” he said.

While Lewis is bullish about industrial nationwide, he’s set his sights on the Philadelphia region for the same reasons it’s caught the attention of other out-of-state investors: its central location between Washington and New York, strong eds and meds sectors, skilled workforce, and major transit assets.

His firm’s first purchase in the area was a 283,500-square foot property at 2400 Weccacoe Ave. in Philadelphia that it bought last fall for $16.75 million. It invested $10 million in redeveloping it, and in less than a year landed an Amazon same-day delivery facility as a tenant.Lewis is especially focused on South Jersey as a major connector between the New York and Philadelphia markets.

As soon as the Bloom Organization told Lewis it wanted to sell the Pennsauken portfolio, the family-owned company’s last holding in the South Jersey industrial market it once dominated, he knew immediately he wanted to buy it.

Bloom has slowly pared down its holdings over the past 10 years following the death of its patriarch, Steven Bloom, in 2008. Lewis had built up a relationship with the company, he said, and they trusted his firm to be “good stewards” of the assets, which make up the Twinbridge Industrial Park and Veterans Industrial Park.

When Bloom first developed the Twinbridge and Veterans industrial parks in the 1980s and 1990s, they built them with 21-foot tall ceilings, significantly higher than the 14- to 16-foot heights that are far more common in Camden County industrial properties.

They also used concrete instead of asphalt in paving, cutting down on wear-and-tear caused by large tractor-trailers, and kept the landscaping in top shape, Lewis said.

Since the buildings were also built before the area became more densely populated, Bloom was able to build up a large footprint in an area that’s become much harder to develop. The high barrier to entry in Pennsauken, which is nestled between major bridges to Philadelphia and highways, means the competition is limited, he said.

Combine those factors with the ever-swelling demand for quick deliveries of goods bought online, and it’s clear Bloom’s development of the properties was ahead of its time.

“It was very forward-thinking,” Lewis said.

The portfolio’s 1,164,939 square feet of space is 100% leased to 49 tenants including Nestle Waters, PepsiCo’s SodaStream and Sprint.

Many of the tenants are more focused on services, light manufacturing and warehousing — not the massive e-commerce operations seen in other industrial areas — but Lewis thinks those companies will become the next wave of e-commerce players, and they’ll need the space to do so. He said he saw this trend emerging pre-Covid, and the pandemic is only accelerating it as people permanently shift away from in-store shopping. Facilities that are located close to those shoppers are going to be hotter than ever, he said.

“These middle-market companies are going to start transitioning to becoming much more sophisticated online,” he said. “They have to. What that means is they’re going to require more warehousing, which is what our property offers. I continue to see a real demand for warehousing in densely populated areas. It’s going to be all the way from the 4 million-square-foot guys to the 2,500-square-foot guys.”

Technology isn’t just changing the way people shop, and impacting how companies source, store and ship their products, Lewis said — it’s also changing how industrial buildings themselves operate.

As tools like robotics, artificial intelligence and autonomous vehicles become more widely adopted, he can picture a not-so-distant future where tenants are looking for a turnkey property that includes built-in technology elements.

“Think of automated forklifts and racking systems in place, software in place, instead of the potential tenants having to get all these things on their own,” he said.

In the meantime, he’s focused on expanding Wharton’s footprint in the market, which has quickly become significant with the purchase of the Pennsauken portfolio.

“We want to buy as much as we can buy that makes sense,” he said, adding they’re in negotiations now to purchase another property “of some” size. “We’re committed to the market.”

Wharton Residential Sells Multi-Family Property in Nashville, TN; Achieves over 50% IRR

Wharton Residential Sells Multi-Family Property in Nashville, TN; Achieves over 50% IRR

Harvests substantial gains after a complete overhaul of the asset’s interiors and exteriors

NEW YORK, Sept. 12, 2018 /PRNewswire/ — Wharton Residential, a Wharton Equity company, announces the completion of the sale of a 210-unit multifamily property, located in Nashville (Antioch), TN. Cedar Pointe, built in 1988, was acquired by Wharton Residential from the original developer in an off-market transaction in early 2017.

Antioch is an emerging sub-market in Nashville, TN. “Cedar Pointe fit squarely with our strategy of purchasing assets in growing markets where we can use our 30-years’ of experience to upgrade the character of a property and provide a wonderful living experience at a great value,” says Peter C. Lewis, President and founder of Wharton Equity.

Working closely with Tampa, FL-based design firm, CID Design, Wharton Residential completely transformed Cedar Pointe into a modern and luxurious place to call home. The renovations included: replacing the siding with HardiePlank, changing out the majority of windows; upgrading 30% of the interior units; renovating the clubhouse, pool and leasing center, enhancing the dog park and playground and significantly augmenting landscaping, lighting and signage.

Acting as true visionaries, Wharton Residential added such touches as a gourmet outdoor kitchen, a custom fire pit and jet sprays in the pool area to further enhance the property.

In the short time of Wharton’s ownership, due to the property’s transformation, the value increased at an extraordinary rate. The sale of Cedar Pointe resulted in an IRR of over 50%.

“It is very rewarding to see our vision and execution be validated in such a way. However, it is always bittersweet to move on from a transaction where we made such a successful imprint. For 30+ years we have been guided by what is in the best interest of our investors, and given all the factors, a sale at this time was the prudent step,” adds Lewis.

Wharton Residential, a family company of Wharton Equity Partners, is focused on the acquisition and development of multifamily properties primarily in the southeast United States. Over the last number of years, Wharton Residential has acquired in excess of $400 million of multifamily properties in partnership with major institutional and high net worth investors. Wharton Equity Partners, formed in 1987 and with offices in New York City and Miami, is a diversified real estate sponsor with deep hands-on operating experience across various real estate assets and strategies. The firm serves as a holding company for a suite of real estate businesses, including Wharton Residential, Wharton Industrial, Wharton Hospitality and Wharton Urban, and has been involved with well in excess of $1.5 billion in transactions since inception. Wharton Equity’s industrial business, Wharton Industrial, has been particularly busy with more than 4 million square feet of warehouse/distributions facilities under development in such markets as Atlanta, Greenville and Central Florida.

Wharton Hospitality Acquires Sheraton Miami Airport Hotel

Wharton Hospitality Acquires Sheraton Miami Airport Hotel

 

New York — Wharton Equity Partners, in partnership with Hersha Hospitality Management and a New York City private equity firm, facilitated the acquisition of the 405-room Sheraton Miami Airport Hotel. The property is the closest hotel to the Miami International Airport and has direct access to the recently opened Miami Intermodal Center, which provides direct connections to South Beach, Brickell and other regional leisure and business destinations. The hotel has 17,000 square feet of meeting and event space, and guests also have access to a 1,800 square foot fitness facility and several food and beverage outlets. The partnership plans on carrying out a full upgrade of the guest rooms and public facilities in coordination with Starwood Hotels.

Wharton Hospitality, a family company of Wharton Equity Partners, is focused on the acquisition and repositioning of full service hotels in top 50 MSA’s, as well as limited service hotels in high barrier-to-entry markets. Wharton Equity Partners, formed in 1987 and with offices in New York City and Miami, is a diversified real estate sponsor with deep hands-on operating experience across various real estate assets and strategies. The firm serves as a holding company for a suite of real estate businesses, including Wharton Residential, Wharton Industrial, Wharton Hospitality and Wharton Urban, and has been involved with well in excess of $1 billion in transactions since inception.

Peter C. Lewis Keynote Speaker at CAPRE’s 2020 Industrial Real Estate Outlook Event

Amazon Same-Day Delivery is Massive Opportunity for Industrial Investors, according to Wharton Equity’s Peter C. Lewis

JERSEY CITY, NJ — Peter C. Lewis, Chairman and President of Wharton Equity Partners kicked off CAPRE’s Industrial Real Estate Revolution with some broad, yet critical, remarks. “Morning Inspiration with Peter C. Lewis: Finding Equity and Structuring Deals with Institutions and High Net Worth Investors in Today’s White Hot Industrial Arena” was a boisterous session that touched on everything from big picture strategy to the day-to-day nitty gritty – with a key connecting force: the future of the industrial space, which is likely going to arrive sooner than anyone ever thought.

Lewis began by situating this topic within the changing offerings of Amazon, specifically their recent shift to same-day delivery. “We’re at the dawn of a change that is going to affect us for decades to come,” he shared. “And industrial is just beginning to change. This is the top of the first inning. The things that are about to change in this business are things that no other asset class has ever seen before.”

Less than 1% of sales are same-day now, but experts predict that will creep up to 20% quickly, shared Lewis. “How is this possible?” he asked the room, full of investors, brokers, and property managers enjoying their coffee. “You’ve got to be right next to the population. The whole movement is about getting as close as you can to the population so that you can get to peoples’ doors as quickly as possible.”

However, Lewis then offered a perplexing disclaimer about the state of the industry – industrial supply is actually decreasing, because other asset classes offer higher margins for those looking to sell land and product. “What makes this fascinating is that the supply of assets around the cities are becoming smaller and smaller,” he explained. “That presents opportunities and challenges.”

“I’ve never seen an asset class go through as much change as industrial is about to, because of e-commerce and technology. It’s a game-changer,” he beamed, before making a prediction. “We’re going to start to see micro-distribution. You’re going to have to have places in the city – we’re looking at places in the city like garages, and dark retail. It can’t be on the 18th floor of an office building. It’ll have to be in the basement, so that you can get goods to people, especially if it takes an hour to get over the bridge!”

Lewis then explained some nuances of structuring deals in the space – for example, industrial assets have often been misunderstood, and usually offer more value than meets the eye. Furthermore, institutional investors require a lot of time to make a decision, because of so many stakeholders. “So, you have to start socializing before you need the money. Seek out the institutions, and chat with them about what they’re doing. Talk to them about deals you’ve done and what you’re looking at. Don’t wait until you need the money to go to them – it’s too late.”

“Don’t forget that they’re very focused on expertise in markets — they want to grow,” he advised, offering another key piece of insight from his experience. “They’ll do a $7 Million USD deal, so long as they feel you can do more. So, you have to have ideas for how to scale – together. “ Lewis then shared that most sponsors put up about 10% of equity funding — on average. “That’s something to think about as you approach these institutions.”

Next up was a comparison of development deals vs value-add projects. “With development deals, you’ll probably see higher prefs, but as you get deeper into the waterfall, more juice back ends,” offered Lewis. “On the income deals, you’ll see a little lower prefs. Maybe you’ll get away with an 8, more likely a 9. The question is then, where do the waterfalls go from there? But believe, you can negotiate with these firms.” However, at that point, Lewis decided to offer a key piece of advice for anyone seeking to seal a deal.

“Early on, if you’re looking for money, quickly get to the bottom line,” he urged. “Say, Tell me what you guys are going to give us on structure. Don’t wait until you get the deposit, to say, wait, you want 15 pref? It’s too late at that point, and they know that. This is why I like to say you should socialize early — so that you know what they want. And funnily enough, once you start doing deals with institutions, they all start to worry that you’re going back to their other competitors. You can use this to your advantage. They need to know that there’s a credible threat of you going somewhere else — in a respectful way, of course.”

Before wrapping up his remarks and seeking questions from attendees, Lewis explicitly shared the moral of his presentation. “We’re in a great spot right now. It’s a unique point in history for this business. However, you have to be really, really focused to try to find properties, because it’s very hard. And you want to start thinking about where your equity is — and early,” he summarized. “And lenders, by the way, are important too. The smaller the asset, the more likely it is that you’re going to be dealing with local banks. You’re going to need to think about those relationships as well. Is there recourse, or is there not going to be recourse? We stay away from recourse as much as possible, but some banks can’t do that. So, you want to be thinking about your capital stacks early on.”

“My feeling is that anywhere along the east coast, where there’s a population, rents are early in their move up,” he then surmised, offering a key take-away for the room. “There could be a point where it slows down a bit, but I think that in the next couple of years, the concept of single-digit rents will be completely obsolete. And I think at some point we’ll see rents crossing over into the territory where office rents are.”

Wharton Industrial Developing Florida Crossroads Logistics Center

617,046-square-foot distribution center planned for Central Florida

Wharton Industrial Developing Florida Crossroads Logistics Center,
Scheduled to Open Fourth Quarter 2019

OCALA, Fla. – (December 5, 2018) – Florida Crossroads Logistics Center, a 617,046-square-foot spec distribution center, is planned for the Central Florida city of Ocala, in an area fronting I-75 that’s proving to be extremely popular as a statewide distribution hub.

The facility, developed by Wharton Industrial, Red Rock Developments, and Westport Capital Partners LLC, will sit on 46 acres of land. The location is key, as it allows for same-day distribution to nearly the entire state of Florida – one hour from Orlando and Tampa, two hours from Jacksonville and four hours from Miami.

The facility, which is expected to be open by the fourth quarter of 2019, is being listed for lease as a spec building by Colliers International Central Florida’s Deborah Mickler, SIOR, Executive Managing Director of Industrial Services; and David Wilson, Associate.

The logistics center will be built in an industrial corridor off I-75 and US-27 in Ocala, near the Chewy.com, AutoZone and FedEx distribution centers. The corridor sees over 58,000 vehicles per day and has 1,500 linear feet of visibility along I-75. A total of 70 percent of truck traffic in and out of Florida passes through this area, and the location would enable a distributor to do same-day delivery to over 14 million people. Central Florida’s industrial market is tight at a 4.4 percent vacancy rate with 223 million square feet of industrial space, creating opportunities for new industrial space.

“We worked closely with our partners in identifying Ocala as an important gateway to distribution throughout Florida,” says Peter C. Lewis, President of Wharton Industrial. “The area benefits from great access and plentiful, capable labor which is essential to the larger tenants we are seeking to attract,” notes Lewis.

“The City of Ocala is excited to welcome this investment in our community and we’re ready to work. There is no better place in Florida than right here in Ocala to do business, raise a family, and thrive.” Said Ocala City Council President Matt Wardell.

Florida Crossroads Logistics Center is the latest in string of other projects that Wharton Industrial is developing throughout the southeast and northeast US. Currently, the firm has over 4 million SF in development or planning. “Like we have done with the other businesses we have built under the Wharton umbrella, we expect Wharton Industrial to be a major force in the development and ownership of industrial real estate,” adds Lewis.

Wharton Industrial is a platform company of Wharton Equity Partners, a New York City-based real estate investment firm formed in 1987. The company has extensive experience acquiring, developing and operating all asset classes, including having recently purchased in excess of $500 million of multifamily properties primarily in the southeast US through its affiliate, Wharton Residential.

Wharton Industrial Purchases Land for 600,000 SF Spec Warehouses, Greenville, SC

Wharton Industrial Purchases Land for 600,000 SF Spec Warehouses, Greenville, SC

Continues the Firm’s Focus on Developing Large-Scale Industrial Properties

NEW YORK/PRNewswire/ — Wharton Industrial, an affiliate of New York City-based Wharton Equity Partners, announced today the acquisition of an approximately 47-acre parcel of land in Greenville, SC to develop 2 state-of-the-art warehouse / distribution facilities totaling 600,000 SF. The transaction represents the first phase of a potential 5 million SF industrial project and is being developed in a partnership consisting of Wharton Industrial, Red Rock Developments of Columbia, SC, the family which has owned the land and an $8 billion real estate private equity fund.

Wharton Industrial and its partners were drawn to Greenville as the area continues to reap the benefits of the expansion of BMW’s 6 million SF manufacturing plant, its central location between Atlanta and Charlotte and its proximity to Inland Port Greer, which provides direct access to the Port of Charleston. The site is situated on State Route 101 and 296 (less than 3 miles to I-85), 4 miles from BMW and 9 miles from Inland Port Green. Other neighbors include Michelin, Valeant Pharmaceuticals and Amazon. Wharton Industrial is partnering with Red Rock Developments of Columbia, SC, a local family that has been the long-term owner of the land, and an $8 billion real estate private equity firm on the project.

Besides Greenville, Wharton Industrial has over 3 million SF in either planning or under construction, including a 1 million SF warehouse / distribution facility being built in Atlanta, GA. The Atlanta transaction is part of a potential development of over 10 million SF.

“The Greenville transaction is representative of the types of projects Wharton Industrial is focusing on as it expands its footprint in the development of large industrial properties,” notes Peter C. Lewis, founder and President of Wharton Equity. “We are completely convinced that the rapid changes taking place in logistics and warehousing today are only the start of a secular shift that will provide unique opportunities over the next decade,” he adds.

Wharton Industrial is targeting the primary and secondary markets in the US where it can develop buildings generally greater than 500,000 square feet, and which will appeal to users seeking Class A space. For its value-add properties, Wharton Industrial will be targeting the top 25 MSA’s where the demand for real-time delivery is becoming a top priority of retailers.

Wharton Equity’s move into e-commerce warehouses is consistent with the firm’s history of identifying secular changes and moving quickly to develop significant businesses around these nascent trends. For instance, in 2012, sensing the pent-up demand for multifamily housing, Wharton Equity aggressively began acquiring value-add properties in the southeast US, and purchased $400 million of assets within 3 years.

Wharton Equity Partners, formed in 1987 and with offices in New York City and Miami, is a diversified real estate sponsor with deep hands-on operating experience across various real estate assets and strategies. The firm serves as a holding company for a suite of real estate businesses, including Wharton Residential, Wharton Industrial, Wharton Hospitality and Wharton Urban, and has been involved with well in excess of $1 billion in transactions since inception.

Wharton Equity’s Peter Lewis Speaks at CAPRE’s Northern New Jersey and Gold Coast CRE Summit

Peter Lewis Says E-Commerce is Changing Industrial CRE

JERSEY CITY, NJ – New Jersey may the Garden State, but lately, you could be forgiven for calling it the e-commerce state. No Garden State CRE summit is complete without a conversation about the latest in shipping and receiving goods from orders placed online. That’s why CAPRE’s Northern New Jersey and Gold Coast CRE Summit featured a presentation, click here to view, by Peter Lewis, Chairman and President of Wharton Equity Partners, a firm which sold a wealth of properties in multi-family in favor of redeploying capital into industrial properties.

“Industrial Real Estate Capital Raising, Development & Leasing in 2019: Is New Jersey Positioned to Lead the Nation in Industrial Activity in the next Three-to-Five Years?” relied heavily on the 32 years of experience offered by Lewis, whose firm aims to looking ahead based on trend lines, to figure out the best to be putting their money. According to Lewis, this foray into industrial real estate has been the most exciting opportunity of his career —  because it is the only business within real estate that is undergoing such a profound transformation, thanks to technology.

“We’re at the dawn of a new industry,” he asserted, before giving a taste of what his firm has been up to recently. “We’re acquiring a building in Philadelphia, right next to Center City, about 300,000 square foot warehouse. When we went to see the CBRE broker and were just getting an overview of the market, he had a set up for the property crumpled up in the corner. We took a look at it, and he said, you don’t want this. It’s a crappy warehouse. There are pigeons in the rafters, there’s a ramp in the middle of it.”

“I asked where it was located, and he said, it’s next to 6 million people,” he continued. “So we immediately looked at it, said we’re going to buy this property, and we’re going to close on it in two weeks. So we’re going to just re-do it – pull the roof off, re-do the floors, re-do the parking lots, re-do everything. And already, we’re getting inquiries from Peapod, and from all of these other firms that want to get their stuff into the city within an hour.”

According to Lewis, what is so fascinating about this experience is how we live in a world that is divided. “Some people look at this real estate as though it’s your grandmother’s real estate from 50 years ago, but others are looking at it with regard to how it’s going to be used in the years ahead, thanks to what is occurring in the world right now,” he explained. After all, the pace of e-commerce sales is increasing exponentially. FedEx recently projected that the number of packages that are delivered in one day will double – from fifty million to one hundred million.

“15% of all sales (in the US) today are online, and in Europe it’s 23%. China’s growing faster. So we have these tailwinds pushing us forward into the consumption of online goods,” asserted Lewis, who then shared that his firm not only builds large distribution centers in the Northeast, but also in the Southeast.

The things that we look at in Industrial, especially with regards to the Northeast, is when you look at the Meadowlands for example, the pace of rent increases astounding. “Today we’re probably at $14-$16 bucks, depending upon the location, and those rents are jumping at least 5% per year right now.”

“As we look at the Northeast, particularly in this region, we honestly love the market around here. But we’re also very interested in the Lehigh Valley. We’re signing a contract right now to buy a 600,00 square foot warehouse down there. And the reason is because of density. All of this activity around e-commerce is predicated upon getting goods to consumers as quickly as possible.”

“You may have read about how Amazon recently announced that there would be no more 2-day Prime – it’s all 1-day Prime,” chuckled Lewis. “When that happened, people saw it and then went back to their jobs. But in the boardrooms of Wal-Mart and Target, they started crying. Because it meant that if they don’t catch up and do 1-day as well, they’re going to be out of business. There are retailers now that are looking at extinction – not just tepid sales. So there’s an urgency to figure out how to change their supply chain to get goods into the city faster.”

Wharton Equity Launches E-Commerce Industrial Platform

Wharton Equity Launches E-Commerce Industrial Platform

Developing 1 Million SF Warehouse/Distribution Facility in Atlanta

NEW YORK/PRNewswire/ — Wharton Equity Partners announced today the launch of its e-commerce industrial platform, Wharton Industrial, with the acquisition of an approximately 80-acre parcel of land in Atlanta. The property, which will be developed with a 1 million square foot warehouse/distribution facility is part of Shugart Farms, a master-planned industrial development with the potential of up to 14 million square feet. The project is a joint venture among Wharton Equity, Red Rock Developments, the Shugart family and a large real estate private equity firm. The Shugart family has owned the over 2,000 acres comprising Shugart farms for more than 50 years.

“We have been studying the effects that e-commerce is having on the logistics and distribution business and made a strategic decision to launch a major initiative to capitalize on what we believe will be significant opportunities in the many years ahead,” noted Peter C. Lewis, a founder and President of Wharton Equity. “It is our intent to build in excess of 10 million square feet over the next couple of years. In addition, we are keenly focused on acquiring obsolete warehouses around major cities and repositioning them into state-of-the-art properties that will attract “last-mile” users,” Lewis added.

The company will be concentrating on the primary and secondary markets in the US where it can develop buildings generally greater than 500,000 square feet, and which will appeal to users seeking Class A space. For its value-add properties, Wharton Equity will be targeting the top 25 MSA’s where the demand for real-time delivery is becoming a top priority of retailers.

Wharton Equity’s move into e-commerce warehouses is consistent with the firm’s history of identifying secular changes and moving quickly to develop significant businesses around these nascent trends. For instance, in 2012, sensing the pent-up demand for multifamily housing, Wharton Equity aggressively began acquiring value-add properties in the southeast US, and purchased $400 million of assets within 3 years.

“One of the great joys of my career has been the ability to proactively seize opportunities around big ideas before they become apparent to the investment community at large,” says Lewis. “It has been very rewarding that this pioneering approach, which is often lonely, has resulted in out-sized gains for our partners over the last 30 years.”

Wharton Equity Partners, formed in 1987 and with offices in New York City and Miami, is a diversified real estate sponsor with deep hands-on operating experience across various real estate assets and strategies. The firm serves as a holding company for a suite of real estate businesses, including Wharton Residential, Wharton Industrial, Wharton Hospitality and Wharton Urban, and has been involved with well in excess of $1 billion in transactions since inception.

Wharton Residential Acquires 210-Unit Multifamily Property In Nashville, TN MSA

Wharton Residential Acquires 210-Unit Multifamily Property In Nashville, TN MSA

Continues Focus on the Acquisition of Value-Add Properties in Strong Secondary Markets

NEW YORK, NY — Wharton Residential, a Wharton Equity company, announces the acquisition of Cedar Pointe, a 210-unit multifamily property located in Antioch, TN. The property, built in 1988, was acquired from the original developer in an off-market transaction. The purchase follows almost $400 million of multifamily acquisitions and dispositions the firm has undertaken over the last few years which have generated annual weighted average returns in excess of 25%.

The firm is planning an ambitious renovations program at Cedar Pointe including: replacing the siding with HardiePlank, changing out the windows; upgrading units; renovating the clubhouse, pool and leasing center and enhancing the landscaping. “We’re really excited about re-envisioning this asset by providing luxurious amenities such as a gourmet outdoor kitchen, jet sprays in the pool, cabana area, fire pit, WiFi throughout and great areas for gathering in the clubhouse,” says Peter C. Lewis, President and founder of Wharton Equity.

As an emerging sub-market in Nashville, TN, Antioch caters to residents seeking workforce housing, “This is an opportunity for us to transform a property, and significantly improve the residents’ experience all at a great value,” adds Lewis.

Antioch is located within 20 minutes of downtown Nashville and Nashville International Airport. The area is a beneficiary of the tremendous job growth the City is experiencing, particularly in the health care sector. Employers like HCA are in the immediate vicinity. Besides the robust job market, Nashville is one of the most sought-after places to live in the US with its professional sports teams, music industry, great culinary scene, and affordable lifestyle.

Wharton Residential, a family company of Wharton Equity Partners, is focused on the acquisition and development of multifamily properties primarily in the southeast United States. Over the last number of years, Wharton Residential has acquired in excess of $400 million of multifamily properties in partnership with major institutional and high net worth investors. Wharton Equity Partners, formed in 1987 and with offices in New York City and Miami, is a diversified real estate sponsor with deep hands-on operating experience across various real estate assets and strategies. The firm serves as a holding company for a suite of real estate businesses, including Wharton Residential, Wharton Industrial, Wharton Hospitality and Wharton Urban, and has been involved with well in excess of $1 billion in transactions since inception.

Peter C. Lewis, Guest Lecturer at Columbia Business School

Peter C. Lewis, Guest Lecturer at Columbia Business School

 
New York — Peter C. Lewis, Founder and Chairman of Wharton Equity Partners, was a guest lecturer at the Columbia Business School where he presented in front of two real estate finance classes on the topic of the “Future of Real Estate.”

“I was honored to be able to speak to the students at Columbia Business School where I was a student some 30 years ago,” noted Mr. Lewis. “It’s such an exciting time in the industry with changes that are occurring and I wanted to share how I see the world going forward and the opportunities that are unfolding,” he added.

Mr. Lewis speaks from experience when commenting on trends in real estate, as his firm, Wharton Equity Partners, has established a reputation over its 30-year existence for being on the forefront of capitalizing on change and being nimble in taking advantage of opportunities. For instance, post the recent downturn, Wharton Equity was an early investor in multifamily assets located in secondary markets where the firm acquired over $400 million in assets. In addition, Wharton Equity has recently made an assertive move into big box industrial development in light of the burgeoning growth of demand from e-commerce and manufacturing companies.

“Going back to Columbia reminded me of how special this institution is, and how it spawned my curiosity about business. There is an electricity at the school shaped by its global student body and speaking in front of this inquisitive audience was something I will treasure for a long time to come,“ said Lewis.

Wharton Equity Partners, formed in 1987 and with offices in New York City and Miami, is a diversified real estate sponsor with deep hands-on operating experience across various real estate assets and strategies. The firm serves as a holding company for a suite of real estate businesses, including Wharton Residential, Wharton Industrial, Wharton Hospitality and Wharton Urban, and has been involved with well in excess of $1 billion in transactions since inception.

Peter C. Lewis Featured Speaker at the New York City Family Office 2018 Outlook Forum

Peter C. Lewis Featured Speaker at the New York City Family Office 2018 Outlook Forum

 
New York — Peter C. Lewis, Founder and Chairman of Wharton Equity Partners, was the featured speaker at a family office conference held on December 12 at the law offices of Baker Hostetler located in Rockefeller Center.

Mr. Lewis’s presentation centered on his view on where real estate is headed in 2018 and beyond. He has spent a 30-year career observing trends and acting on these observations in selecting strategies for Wharton Equity to pursue. “Since founding Wharton Equity in 1987, we have chosen an investment approach which is agnostic to asset types or strategies. What governs where we invest is related to where we think things are going, rather than where they currently are,” notes Mr. Lewis.

For instance, capitalizing on the surge in e-commerce, the firm recently launched Wharton Industrial, a platform focused on the development of big box warehouses, as well as the acquisition of last-miles properties. The firm’s initial transaction is the development of a 1 million square foot warehouse/distribution facility located in Atlanta, GA. Additionally, in 2012, while others were targeting the primary markets for the acquisition of multifamily properties, Wharton Equity pursued secondary markets such as Savannah, Nashville and Charlotte, and acquired over $400 million of properties since that time. Finally, Wharton Equity was an early investor in self-storage amassing nearly 10,000 units before selling the properties to a public REIT and Northwestern Mutual Life Insurance.

“It has been one of the great joys of my career to have the freedom to pursue strategies that were pioneering at the time, and proved to be prescient in hindsight,” Mr. Lewis adds. “While there is obviously concern that the markets are getting over-heated, we see an enormous amount of opportunity in picking big themes to invest in, and letting time marinate our thesis.”

Wharton Equity Partners, formed in 1987 and with offices in New York City and Miami, is a diversified real estate sponsor with deep hands-on operating experience across various real estate assets and strategies. The firm serves as a holding company for a suite of real estate businesses, including Wharton Residential, Wharton Industrial, Wharton Hospitality and Wharton Urban, and has been involved with well in excess of $1 billion in transactions since inception.

Wharton Equity’s Midtown Mixed-Use Project Grand Opening

District 36 Grand Opening in Midtown Miami

 

Miami, FL – Developers Wharton Equity Partners and Mack Real Estate Group have completed construction of the Eve at the District, named after an art piece (“Eve”) by Hawaii-based artist Anna Sweet which is featured prominently in the lobby. The project injected 195 luxury rental units and over 61,000 square feet of retail/restaurant space in an area nestled between Midtown Miami and the Design District. Located at 3635 Northeast 1st Avenue, the developers employed Stantec for architecture and design services. Susan LaFleur, director of hospitality and residential interiors of Stantec’s Miami Office reveals, “Our design team was seeking a ‘wow factor’ that would immediately engage and intrigue the guest and set the sensual tone of the space. Eve did that so wonderfully that naming the project after her was obligatory.” Two additional pieces of work by Sweet, will be displayed in the new building’s public spaces.

City Furniture Signs as Flagship Tenant for WEP’s District 36 Building

Featured in The Real Deal

 

City Furniture Signs as Flagship Tenant for District 36

Lease is for 28,000 sf of project’s total 63k sf of commercial space plus 195 apartments
 
By Ina Cordle

Rendering of District 36, Irma Figueroa and Michael Comras

City Furniture just signed a lease as the flagship retail tenant at District 36, the new mixed-use project on the edge of Midtown Miami and the Design District.

The furniture showroom represents the first tenant for the recently completed property developed by Mack Real Estate Group and Wharton Equity Partners.

Comras Company CEO Michael Comras and Comras’ Irma Figueroa, director of retail leasing and sales, represented the developers in the 28,000-square-foot lease at 3635 Northeast First Avenue, according to a release. Monette Klein-O’Grady and Daniel W. O’Grady of Prime Sites Inc. represented City Furniture in what will be its first urban expansion. Terms of the lease were not disclosed.

The store will span the entire northern block of of Northeast 36th Street, from Northeast First Avenue to Northeast First Court, Comras said. The site will represent Tamarac-based City Furniture’s 17th showroom in Florida. 

In total, District 36 has 500,000 square feet, including 63,000 square feet of retail, showroom and café space, and 195 rental apartments above, at the intersection of Midtown Miami and the Design District.

Wharton Equity, a real estate investment firm with offices in Miami and New York City, has been active in the Miami market in recent years. In December, the firm, together with Northwood Ravin, bought the late Marty Taplin’s office building and property in Bay Harbor Islands for $20.25 million, with plans to develop a mixed-use project. Wharton Equity also owns a 2.3-acre development site in the heart of Miami’s Central Business District, zoned for more than 2 million square feet of mixed-use development, including more than 2,200 residential units. It also owns and is renovating the Sheraton Miami Airport Hotel in partnership with Hersha Hospitality and a New York private equity fund.

The area on the outskirts of the Design District is increasingly attracting furniture and furnishings stores, as showrooms continue to be priced out of the district’s core. Nearby, real estate investor Sam Herzberg bought the Brown Jordan building at 3625 Northeast Second Avenue for $13 million in May 2016. And art collector Ella Fontanals-Cisneros plans to redevelop a building for design-related tenants at 301 Northwest 36th Street, which she bought in February 2015 for $8 million.

$250 Million Multifamily Transaction

Featured in Multi-Housing News Online

 

Wharton Acquires 18 Apartment Communities for $250 Million

MHN Exclusive

 

New York — Wharton Equity Partners has completed the acquisition of an 18-property multifamily portfolio encompassing 4,179 units. The New York City and Miami-based real estate investment firm paid $250 million for the portfolio. The acquisition brings Wharton Equity’s recent multifamily purchases to over $400 million, a total the firm is seeking to significantly add to in 2014 with its expansion into the New York City area and Miami markets.

Wharton completed the purchase via a joint venture with an institutional partner and BH Management, a national multifamily property owner and operator. Wharton will provide comprehensive asset management and operating partner oversight, while BH will serve as the property manager.

Most of the portfolio is situated in North and South Carolina, with the remainder located in Kentucky, Kansas, Texas and Georgia. Many of the portfolio’s properties are in highly sought after markets such as Columbia, S.C., Charlotte and Savannah.

“The properties were undercapitalized,” Peter Lewis, president and founder of Wharton Equity Partners tells MHN. “Besides deferring capital improvements, there were not sufficient funds for proper marketing and other less tangible initiatives, [such as] landscaping, lighting and signage. This erodes employee morale, as well as reduces the competitiveness of the properties. With the capital Wharton and its partners are bringing to the portfolio, we believe the properties will be quickly infused with a new sense of excitement and commitment.”

Lewis reports that several factors attracted Wharton Equity to the portfolio. Among them were locations in strong secondary markets, the potential to add value through interior and exterior improvements, and the fact that the transaction size provided economies of scale. In addition, Wharton was able to negotiate directly with the seller in an off-market transaction.

Challenges included coordinating due diligence on 18 assets, and closing within 60 days, as required under the contracts. Another hurdle was securing nearly $200 million in debt “flexible enough to allow us to execute on our business plan of repositioning and selling the assets,” Lewis says.

Wharton Equity intends to invest approximately $17 million into the properties over the coming 18 months. That capital infusion will go toward completing deferred maintenance and undertaking value-add upgrades to the properties and unit interiors.

With the firm’s history in residential development, Wharton Equity always brings a fresh perspective to its examination of properties, Lewis says. That perspective may result in the company initiating simple steps like the relocation of signage, the addition of lighting or the painting of an accent wall in a model. It may also mean evaluating staff and assisting in training.

“Given Wharton’s experience in construction, Wharton will work closely with BH Management in reviewing capital improvement programs,” Lewis says.

 

$45 Million Savannah Acquisition

$45 Million Savannah Acquisition

 

New York — Wharton Equity, through its Wharton Residential Platform, has acquired a brand new, 326-unit Class A property located in Pooler, Georgia, a highly-desirable sub-market of Savannah, which was in the final stages of lease-up. When the company went into contract, the asset was under 60% occupied and was 80% leased upon closing, evidencing Two Addison Place’s strong demand. “Continuing our strategy of purchasing great multifamily properties in growing markets, Two Addison Place is a prized acquisition that we will be proud of owning for years to come,” states Peter C. Lewis, President of Wharton Equity.

Inspired by the architecture of Addison Mizner, architect of The Cloister Hotel in Sea Island, GA and many of Florida’s most luxurious landmarks, the property has red tile barrel roofs, wrought iron balcony railings and stucco siding. Although in first-class condition, Wharton Equity will be enhancing the asset from adding a fire pit and a second gracious fountain, to supplementing landscaping, signage and lighting.

Wharton Residential, a family company of Wharton Equity Partners, is focused on the acquisition and development of multifamily properties primarily in the southeast United States. Over the last number of years, Wharton Residential has acquired in excess of $400 million of multifamily properties in partnership with major institutional and high net worth investors. Wharton Equity Partners, formed in 1987 and with offices in New York City and Miami, is a diversified real estate sponsor with deep hands-on operating experience across various real estate assets and strategies. The firm serves as a holding company for a suite of real estate businesses, including Wharton Residential, Wharton Industrial, Wharton Hospitality and Wharton Urban, and has been involved with well in excess of $1 billion in transactions since inception.

Wharton Equity Chairman & President Featured

Featured in Real Estate Weekly

 

Sharp learning curve puts money maker Lewis on the fast track to next big thing

 

By Konrad Putzier

 

Many developers spend their entire career specializing on one region or asset type. Peter C. Lewis has found success by doing the exact opposite.

Over his almost 30 years in real estate, the chairman, president and founder of Wharton Equity Partners has switched from developing master-planned communities in Greater New York to acquiring self-storage units, to purchasing multifamily buildings in the South and Midwest, and then back to buying multifamily buildings in Greater New York.

“I’ve always looked at the world and said ‘What’s going on and how can we take advantage of it’,” he said. “We want to be adjusting to the times and not be beholden to any particular strategy or asset class.”

This flexibility has not only led him into unchartered real-estate territory, but also made him an investor in emerging growth companies such as tech startup dataminr – a company that mines Twitter for breaking news.

Right now, Lewis believes the times are favoring multifamily buildings in cities such as New York or Miami.

Wharton Equity bought a two million square foot development site in Miami last year, and hopes to invest an another $250 million in New York and Miami in 2014 – half of Wharton’s planned total investment volume for 2014.

Lewis, a native of Great Neck, Long Island, did not start out in real estate.

After graduating from Wharton with a BS, he began a career in banking in the early 1980s. Lewis worked as a credit analyst at Manufacturers Hanover Trust, got an MBA at Columbia and had a year-long stint at Arthur Andersen (“not my cup of tea”), before earning his spores in investment banking at E.F. Hutton on Wall Street.

As an analyst, he worked in the division that financed real-estate projects for three years. “I was getting antsy,” he recalled. “I didn’t like the bureaucracy and I wanted to be the guy who buys the building, not just the provider of capital.”

In 1986, Lewis left E.F. Hutton and decided to set out on his own. Together with David E. Eisenberg, Wharton’s current CEO, the ambitious twenty-something bought a development site for a shopping center on Long Island.

“I really didn’t know what I was doing,” he recalled. “It’s a whole different story when you are the recipient of capital, instead of just providing the money. But nothing speeds up the learning process more than knowing your financial survival depends on it.”

In the end, Lewis and Eisenberg flipped the site for almost a $1 million profit, and used the money for a deposit on a 317-unit residential development site in Montville, NJ. With the help of Howard Blitman and his construction company, who gave the two no-names much-needed credibility among investors, Lewis and Eisenberg built the 317-unit townhouse and condo complex, Montville Chase. The project gave Wharton Equity its first credentials as a developer.

Over the following years, the company developed several residential projects in Greater New York. But in the mid-90s, Lewis noticed that land in and around New York was becoming scarcer and more expensive.

“We concluded the housing business wouldn’t be for us unless we moved to places like Florida or California,” he said. “So we moved into income-producing properties, setting our sights initially on self-storage buildings.”

“It was a fantastic business — no one ever called and complained that the water wasn’t running properly.”

Wharton Equity started off by buying almost 80 percent of all self-storage units in the Hamptons, rebranding them, and selling them for a profit. Then, the firm repeated the exercise, buying 6,500 storage units in Long Island City, the Bronx and Yonkers from GE Capital.

Lewis painted the buildings purple to make them stand out, unified them under one brand name, and sold them to Northwestern Mutual Life for a substantial profit.

Around 2006, Lewis formed an opportunity fund with an institutional partner in anticipation of the pending downturn.

The fund acquired a mixed-use project in Lexington, Kentucky as well as two warehouse buildings in midtown Manhattan, specializing in high-end art storage. Facing a difficult fund-raising environment, Lewis subsequently sold his interest and set his focus on multifamily acquisitions.

Wharton Equity has been making up for lost time, buying more than $400 million in multifamily projects, consisting of over 6,400 units in eight states, in less than two years.

Last month, Wharton Equity announced the acquisition of a $250 million, 18-property multifamily portfolio.

Kenneth Hoff, president of Multi Housing Equity Partners, who helped source and structure the deal on behalf of Wharton Equity, is actively involved in helping the company find additional properties to acquire in NYC and the southeast.

Despite his busy schedule, Lewis has found time to teach a younger generation the tricks of the trade.

He has taught a class in entrepreneurship at Columbia University, and said he is looking to teach at the University of Pennsylvania’s Design School this spring. Lewis, who is married with three children and lives in Old Westbury, said he is far from done.

“I’d like to see if we can do more than $500 million in acquisitions this year,” he said, adding that he plans a “major push” in New York multifamily and hospitality.

“We are moving into a stage of the real estate cycle where the theme will be urban,” Lewis said. “Real money will be made designing cool projects in cities like Miami and New York that cater to renters seeking social, lifestyle-type living in a vertical environment.”

Then he added: “I think we can go bigger. It’s not my ego, it’s more a question of: why not? Setting high goals and achieving them is the highest joy.”

Wharton Equity’s Midtown Mixed-Use Project Tops Out

Featured in The Real Deal: New York City Real Estate News

 

District 36 Tops Off in Midtown Miami

Construction began mid-year 2015

 

By Sean Stewart-Muniz

 

The topped off District 36, left, and a rendering of the finished 19-story building, right
The topped off District 36, left, and a rendering of the finished 19-story building, right

Developers Wharton Equity Partners and Mack Real Estate Group have topped off their 19-story apartment building District 36 in Midtown Miami.

Construction of the mixed-use tower first began in mid-year 2015 after Wharton and Mack closed on $68 million in construction financing with JPMorgan Chase Bank.

The development partners are building 195 rental units and 63,000 square feet of retail space split between the first and second floors. Comras Company, headed by Michael Comras, is handling leasing for the building’s commercial spaces.

Located at 3635 Northeast 1st Avenue, District 36 is expected to open by the end of 2016. The development partnership first paid $9 million for the acre-sized site in 2014, according to Miami-Dade County property records.

ADD Inc., now with Stantec, is designing the project. The architecture firm’s principal Jonathan Cardello told The Real Deal in May 2015 that the project’s purpose was to act as a bridge between Miami’s Midtown and Design District neighborhoods.

Wharton Equity Breaks Ground on Miami Design District Building

Featured in The Real Deal: New York City Real Estate News

 

Sub-Zero Wolf inks lease for flagship showroom in Miami Design District

Wharton Equity Partners is developing the two-story building at the entrance to the Design District

 

By Ina Cordle

 

Sub-Zero Wolf, the high-end appliance maker, has signed a lease for its first Florida flagship showroom in Miami’s Design District, The Real Deal has learned.

Lyle Chariff, president of Chariff Realty Group, told TRD Sub-Zero Wolf is taking the entire 9,000-square-foot second floor of the upcoming building at 3711 Northeast Second Street being developed by the real estate investment firm Wharton Equity Partners.

The sale to Wharton Equity Partners included the conceptual designs by Touzet Studio and entitlements, Chariff said at the time. One of the conditions that the purchaser made was that Chariff Realty Group stay on to be the exclusive leasing agent.

When completed, the new two-story building, called 3711, will have a 10,000-square-foot first floor with 32-foot tall ceilings that will make the second floor appear “to float” over the highway, Chariff said.

“We believe this is going to be the most visible showroom in the Design District, considering its position on the highway, I-195, which has over 100,000 eyeballs a day going in and out of Miami Beach,” David E. Eisenberg, CEO of Wharton Equity Partners, told TRD.

The property will also have an 8,000-square-foot rooftop event space with a retractable cover for entertaining. “Sub-Zero fell in love with this space because of the rooftop deck being a 360-degree view of Miami,” Chariff said.

Sub-Zero will be able to use the rooftop for events and for demonstrating summer kitchen appliances, Eisenberg said. “We, as the owner of the building, expect to generate additional income renting out the rooftop for select special events,” he added.

New York-based Wharton, founded by Eisenberg and Peter C. Lewis in 1987, has been active in the Miami market in recent years. Wharton just topped off District 36, a 500,000 square-foot, mixed-use project at Northeast 36th Street and Northeast First Avenue on the edge of the Design District and Midtown. Wharton also owns a 2.3-acre development site in the heart of Miami’s Central Business District, zoned for more than 3 million square feet of mixed-use development, including more than 2,200 residential units.

The building is scheduled for completion by the end of this year, and Sub-Zero will move in during the spring of 2017, Eisenberg said. Currently, Madison, Wisconsin-based Sub-Zero has just one showroom in the Southeastern U.S., in Atlanta, according to its website.

The new showroom is part of the push for furniture showrooms and home furnishings stores to move to the edge of the Design District, as luxury boutiques take over the heart of the area. Outdoor furniture company Brown Jordan recently opened its store in a new property developed by Chariff Realty Group at Northwest 36th Street and Northeast Second Avenue, near Midtown Miami.

Chariff said rates for ground floor space can range from $100 to $150 per square foot in that part of the Design District. He declined to disclose Sub- Zero’s rate, but said it is at a premium to other second floor space in the Design District due to its visibility and prominence on the highway.

“We have had a lot of serious interest and offers from tenants who want the first floor and we have been very selective to create the ideal co-tenancy,” Eisenberg said. “Because we have Sub-Zero taking the entire 9,000 square-foot space the tenants are willing to pay extra to be on the first floor.” He expects the first floor to have complimentary businesses such as design and home furnishings firms.

“We’re very strong believers in Miami and we believe the long term prospect of Miami is extremely strong,” Eisenberg, who leads the firm’s Miami office, told TRD. “We are making a long-term investment in Miami.”