CapRidge Partners Acquires Flex/Light Industrial Assets in Atlanta

July 6, 2021

CapRidge Partners is excited to announce the acquisition of their first three flex/light industrial assets in CapRidge Partners Value Fund III, LP.  We have been following the industrial space for several years and continue to see greater opportunity in flex/light industrial product.  Supply is diminishing, as developers are not building new flex product, and older infill product is being torn down for “highest-and-best use” product. Meanwhile, demand for this type of product is increasing rapidly due to the need for warehouse space, docks, loading areas, and showroom type spaces with a range of office needs.  Our strategy is to target the fragmented/local ownership of the flex/light industrial sector that provide an opportunity for CapRidge’s active management to add value.  We will aggregate these assets into a larger portfolio that will be attractive to institutional buyers.  We are currently in deep evaluation of several similar assets.

Cobblestone Business Park is a two-building flex industrial portfolio located in the Atlanta market totaling 97,859sf. The portfolio is located approximately three miles from I-575 and is well positioned in the Northwest submarket of Atlanta in the flourishing city of Woodstock, one of the largest labor markets in Atlanta. Tenants at the building are high-quality local companies that provide critical services to the community, offering stable in-place cash flows with strong upside for future leasing, as many rents are below market.

 

Cobblestone Business Park is a strong performing asset with near-term upside. Our strategy is to mark-to-market the existing tenancy as demand for this type of space continues to grow, and the amount of available product remains limited.  NeoMed is occupying the entirety of 100 Londonderry (38,000sf) until December 2022, and is currently subleasing their space to four subtenants. There is additional upside here to do direct deals with subtenants, all of which have shown interest and are in various stages of negotiation.

 

Franklin Forest is a five-building flex industrial business park located in one of Atlanta’s premier industrial submarkets, Northwest Atlanta, totaling 113,985sf.  The portfolio is located adjuacent to I-75, one of Atlanta’s most desirable northwest industrial locations, with little available land for development of new product.  New supply has been non-existent with 0sf delivered in the last two years.  With current occupancy at 77%, there is an opportunity for notable upside while still offering secure in-place income.

 

Franklin Forest presents an opportunity to buy a rare value-add flex industrial deal in an off-market transaction.  The near-term upside on this deal will be leasing the vacancies in 830 Franklin and 811 Livingston.  We would position the 830 Franklin vacancy to cater to mid to large size flex users who don’t have any other large block options in the immediate area.  The space would also be attractive to smaller tenants who could take the space in tranches. Managing rollover during the hold period, marking tenants to market, and converting from modified gross leases to NNN adds additional upside to the deal during the remainder of the hold period. After executing our capital and leasing plans we will be stabilized and in an improving flex industrial market

 

Whittier Mill Complex is a five-building light industrial portfolio located in Atlanta, GA totaling 81,409sf.  The portfolio is strategically located within one mile of two different interchanges of I-285 and in close proximity to Buckhead, Midtown, and the northwest Atlanta suburbs.  This infill location is surrounded by a strong amenity and consumer base that fills a niche of highly-desired yet difficult to find product type for a variety of tenants.

 

As a shallow bay, multi-tenant industrial complex located in an excellent infill location, the property currently serves a variety of uses including warehouse, distribution, and showroom that benefit from the ability to reach over 1.6 million people, the majority of their respective customer bases, in under 30 minutes. Currently, Whittier Mill is 95% leased to 9 tenants, offering secure in-place cash flow with an opportunity to increase yield through lease-up of the final vacant suite and capitalizing on continual rent growth.

 

Whittier Mill presents a rare opportunity to acquire urban infill light industrial product, inside the I-285 perimeter. 21 million square feet of industrial product inside the I-285 perimeter has been demolished for “highest and best use” product types or repurposed over the last 20 years. As tenants continue to be pushed further out from the CBD due to supply constraints, assets like Whittier Mill will be able to push rates due to the decrease in competition. Due to the infill nature and future development of Microsoft’s East Coast hub, a few miles away in Grove Park, land comps in the area have been in the $1M per acre range recently, which implies that almost half of the current value of Whittier Mill is in the underlying 4 acres of land.