Property Description
The Property is a 68,674 SF rail-served industrial manufacturing and outdoor storage facility situated on 6.93 acres in Denver, CO. At closing, GCC executed a 20-year absolute net lease with Integrated Power Services (“IPS” or “Tenant”) with a parent company guarantee. The Property is functional, infill industrial product with ample outdoor storage and excess land for future expansion.
- The mission critical location has multiple capabilities, including in-shop repair, field services, and distribution and storage of critical assets.
- GCC acquired the Property for $12.0MM at a weighted GAAP capitalization rate of 8.2%.
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Investment Thesis
- Mission Critical Real Estate – The Tenant has a strong history of operations in the facility, and the location represents a critical component of the Company’s business. The Tenant invested significant capital expenditures in equipment housed at the Property.
- Strong Credit – Prior to the Transaction, the Tenant merged with another entity, significantly increasing the scale and geographic footprint of the ultimate guarantor. The Tenant generates substantial margins and with limited capital expenditures, has a strong free cash flow profile.
- Sound Industrial Market – The Property presented an opportunity to enter a fundamentally strong industrial market at an attractive basis. Given limited risk of new supply in the submarket, the Property is poised to benefit from outsized rent growth.
- Expansion Potential – The Property’s relatively low site coverage presents an opportunity for building expansion or redevelopment potential at the end of the 20-year lease term.
Market Description
The Property sits just off I-70 northeast of downtown Denver. The submarket boasts a heavy concentration of industrial users as it provides easy access to downtown (10 miles) and Denver International Airport (15 miles). The Property is 3 blocks away from I-70 which provides east-west access across Denver and proximity to many of IPS’s customers. At the time of the Transaction, vacancy for the overall Denver industrial market was 5.4% compared to 3.8% for the submarket.
Tenant Description
IPS provides maintenance, repair and replacement solutions for critical process equipment serving industrial and renewable energy end-markets in North America.