Warehouse / Distribution
WHARTON INDUSTRIAL, formed in late 2017, has quickly become a prominent investor/developer of warehouse distribution facilities. The focus on industrial real estate stems from the firm’s conviction about the transformative change e-commerce is having on the way goods will be distributed in the years ahead. To capitalize on this, Wharton Industrial has focused on the development and redevelopment of big box distribution facilities, and “last mile” warehouse properties. Representative transactions of its nearly 11 million SF of activity include:
1.5 Million SF, $240 Million Warehouse Development, Mesa, AZ
Wharton Industrial has begun construction on a $225 million, 100-acre site in Mesa, AZ where it is developing an 11-building, 1.5 million-square foot Class A industrial park known as “The Hub@202.” The buildings will range in size from 65,000 square feet to 270,000 square feet and will feature 28- to 32-foot clear heights; 73 trailer parking spaces; 60-foot speed bays; and 1,429 car parking spaces.
The site is among the last large contiguous land parcels remaining in the area and is centrally located in the highly desirable Southeast Valley submarket of Metropolitan Phoenix — one of the fastest growing industrial markets in the country and poised to lead the nation in industrial rent growth over the next five years.
The project is part of Wharton Industrial’s strategy of making strong conviction investments in markets the company believes are on the cusp of significant growth stemming from the impact of technological change. Mesa squarely fits this profile as it is emerging as the “digital desert” with companies like Microsoft, Google, Apple and Amazon having a strong presence. Moreover, the area is home to other “new age” companies involved in chip manufacturing (Intel and Taiwan Semiconductor), aerospace (Boeing, Lockheed, Gulfstream, Virgin Galactic) and electric vehicles (Lucid).
The HUB@202 is being positioned to cater to firms seeking a presence in the East Valley which are attracted to the strong, skilled labor market in the area and the ease of access to the greater Phoenix area, as well as California and Nevada.
The lead lender on the project is MSD Capital, an affiliate of the family office of Michael Dell.
1.3 Million SF Portfolio of 34 Last Mile Warehouses, Pennsauken, New Jersey
Wharton Industrial acquired 34 warehouses in Pennsauken, New Jersey from the original developer of the properties in an off-market transaction. The assets are located 15 minutes from Center City Philadelphia and increase the company’s footprint in the market. Given their access to nearly 6 million people in the metro area, the assets serve as a key last mile distribution point for the portfolio’s regional and national tenants such as Nestle, PepsiCo and Sprint.
The properties, known as Twinbridge Industrial Park are in proximity of each other and represent over 30% of the inventory of investor-owned industrial in Pennsauken. Wharton Industrial has completed upgrading the common areas of the property with enhanced landscaping, signage, lighting and to create a new web portal to enhance tenant relations (e.g., service calls, leasing matters). In addition, the firm has undertaken a comprehensive replacement of many of the roofs in the park.
The properties will benefit significantly from the further emergence of Philadelphia as a major hub for distribution on the east coast. Additionally, there has been an increasing migration of tenants from the New York metro area and northern New Jersey to south New Jersey/Philadelphia seeking greater affordability. These factors coupled with the scarcity of available inventory and land for development, portend a continued rise in rents.
Wharton Industrial is partnering with Walton Street Capital on this project and received debt financing from Nuveen.
283,000 SF Last Mile Warehouse, Philadelphia, Pennsylvania
Wharton Industrial acquired a 283,000 SF warehouse in Philadelphia, PA and immediately commenced a major renovation program to convert the former subway repair facility into a top-tier last mile warehouse. The improvements included removing rail beds inside the facility, replacing the entire roof, leveling interior floors, installing LED lighting, upgrading loading docks, and repaving the parking areas. Wharton Industrial also branded the property, “SoPhi Logistics Center.” Nine months after acquisition, Wharton Industrial was able to secure a 10-year lease with Amazon for the entire building. The company is utilizing the property as a “mission critical” facility for its same-day delivery service.
The Property is strategically located for e-commerce distribution / fulfillment as it is within one hour of 6 million people and one day’s drive of half the US population. In addition, the SoPhi Logistics Center sits at the nexus of I-95, I-76, Center City, the port of Philadelphia, and the Philadelphia International Airport. Wharton Industrial is actively seeking last mile warehouses and believes this asset is representative of the unique opportunities in transforming older industrial assets into modern facilities geared towards the needs of today’s users.
After completing the renovation program and leasing the facility, Wharton Industrial sold the property and achieved a 208% gross IRR on the transaction.
Wharton Industrial partnered with Walton Street Capital on this project.
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1 Million SF Warehouse Development, Atlanta, Georgia
Wharton Industrial signed a 20-year lease for its nearly 1 million square foot development project in Atlanta, GA with PVH Corp., the company behind clothing brands including Calvin Klein and Tommy Hilfiger. The recently finished building, which sits on over 80 acres and was leased prior to completion, was developed by Wharton Industrial, Red Rock Developments and an affiliate of Starwood Capital Group.
Located immediately south of downtown Atlanta, the property is strategically situated in proximity of key modes of transportation including the CSX rail intermodal, the Hartsfield Jackson International Airport, and interstate highways I-85 and I-75. Neighbors of the project include Duracell, Clorox, Smuckers, and Google.
Shortly after completion the property was sold to a REIT, yielding a gross IRR of nearly 30% and a 2x on invested capital.
617,000 SF Warehouse Development, Ocala, Florida
Foreseeing the strategic importance of Ocala, FL with respect to its location and proximity to labor, Wharton Industrial acquired a 46-acre parcel of land in the market and developed a 617,000 SF state-of- the-art warehouse / distribution facility. Prior to the completion of the project, the firm signed a 10-year lease with Amazon for the entire building.
Ocala is the Northern Apex of the Central Florida distribution market on the I-75 corridor, where the project is located. 70% of Florida truck traffic goes through this corridor. The area also benefits from an abundant and qualified labor force, with approximately 600,000 people within a one-hour drive of the property. Neighbors of the project include Chewy.com, AutoZone, and FedEx. Wharton Industrial partnered with Red Rock Developments, and Westport Capital Partners on the project.
Upon completion, the property was sold to a REIT, yielding a gross IRR of 58% and 1.7x on invested capital.
580,000 SF Warehouse Acquisition, Hazleton, PA
Wharton Industrial purchased the former Office Depot distribution center and negotiated a sale/leaseback for 40% of the building. Upon the acquisition, the firm undertook a capital improvement program which included installing a demising wall to bifurcate the space, repaving the parking area, which included adding a stretch of road to complete a loop around the building, and installing LED lights.
Located in the Humboldt Industrial Park, the property benefits from easy access to Interstates 80, 81 and 76 and a strong labor pool. Further, the building’s 32+ foot clear ceiling heights and ample parking provides unique attributes in the NE PA market which is accessible to over 30% of the US population within one-day’s drive.
Wharton Industrial partnered with CenterSquare Capital Management on the transaction. Upon stabilization, the property was sold to a REIT, yielding a gross IRR of 33% and 1.7x on invested capital
WHARTON INDUSTRIAL has extensive experience in the acquisition, repositioning and operation of self-storage assets having 10,000 units. The continued demand for rental apartments, which have limited storage space, coupled with the proliferation of on-line purchases portends well for the self-storage industry in the years ahead. In general, Wharton Industrial targets high-barrier to entry markets where it can attain critical mass. Representative transactions include:
New York City Art Storage Warehouses
In two separate transactions, Wharton Industrial, in conjunction with an institutional partner, orchestrated the acquisition of two warehouse properties that primarily cater to the fine art and antiques industries. The purchases resulted in Wharton Industrial having a virtual monopoly on the art storage market in midtown Manhattan. A comprehensive renovation program for both properties was undertaken. Debt financing for both acquisitions was provided by Prudential Mortgage Company. Total capitalization of the two transactions exceeded $80 million.
New York Metropolitan Area Self Storage Portfolio
An affiliate of Wharton Industrial, Wharton Storage, in partnership with an institutional investor, acquired a portfolio of approximately 6,500 self-storage units from an affiliate of GE. Located in the New York metropolitan area, the facilities required extensive renovations and were repositioned as "The Storage Company" with a new logo and brand identity. The transaction was financed with an acquisition loan from UBS Real Estate Investments, Inc. and equity was provided by a major institutional investor. After successfully repositioning the assets, Wharton Industrial sold the portfolio to an affiliate of Northwestern Mutual Life for approximately $56 million.
Aggregation of Self-Storage Properties in the Hamptons, New York
An affiliate of Wharton Industrial, Wharton Storage, assembled a portfolio of over 2,200 self-storage units from different sellers across three properties located in the Hamptons, New York. While in control of over 80% of the self-storage units in a high barrier-to- entry market, Wharton Industrial, who managed the properties and handled the integration of the assets, significantly raised rents and re-branded the facilities. The portfolio was ultimately sold to a NYSE REIT.