Starwood Real Estate Income Trust acquires first industrial portfolio
Starwood Real Estate Income Trust (SREIT), a nontraded REIT managed by Starwood Capital Group, announced today the acquisition of the Midwest Industrial Portfolio, a 33-asset portfolio comprised of 4.1 million square feet of primarily class A properties in Chicago (43 percent), Indianapolis, (33 percent), Columbus (16 percent) and Milwaukee (8 percent). The Midwest Industrial Portfolio is currently 98 percent leased to 50 tenants and has maintained an average occupancy of just under 95 percent over the last 10 years. Chicago, Indianapolis and Columbus are all top-20 industrial markets in the United States and each has the ability for tenants to access over 50 percent of the U.S. population in under 24 hours.
The Midwest Industrial Portfolio benefits from being in markets with strong transportation networks and low costs of doing business, and it is largely comprised of light industrial buildings of less than 250,000 square feet. Given the average vintage of the assets in the portfolio (2005), the properties benefit from having modern designs that appeal to a broad swath of industrial tenants across all markets — high clear heights, minimal office finish, modern sprinkler systems and lighting packages, and ample outside storage space.
“Industrial is a great asset class and operating fundamentals point to continued strength in the coming years,” said Garret Overlock, vice president of acquisitions at Starwood Capital. “We love this portfolio for SREIT for a number of reasons. These are major industrial markets that service not only local but regional and national distribution needs, the tenant quality and diversity is very high, and the light industrial nature of the portfolio mitigates our exposure to future supply, much of which is concentrated in the bulk industrial space [properties greater than 250,000 square feet]. Further, light industrial continues to witness the lion’s share of tenant demand in the industrial sector. It’s another strong acquisition for SREIT.
“We are also pleased to establish an ongoing partnership with Becknell Industrial in connection with this transaction. Becknell is a market-leading developer, owner and manager of industrial properties across the U.S. and brings exceptional expertise and experience to the portfolio.”
As of Nov. 30, 2019, the SREIT portfolio had an estimated total asset value of $1.98 billion across 70 properties.
