jcim-aerial

JCIM

Property Description

On December 23, 2014, we acquired two adjacent industrial buildings totaling 535,500 square feet in Monroe, MI, a low vacancy industrial market in suburban Detroit for $30,750,000 ($57.42 per square foot). The properties are leased to the largest automotive interiors business in the world, JCIM, LLC.

  • The properties are leased on an absolute net lease to JCIM LLC through August 2023.
  • 1833 Frenchtown Center Drive is a 315,000 square foot Class A industrial building constructed in 2005. The building is a fully-heated, concrete tilt-up building with a single ply EPDM roof, clerestory windows, 34’ clear height, 26 dock high doors, 4 drive in doors and an ESFR wet pipe sprinkler system.
  • 220 Revard Road is a 220,500 square foot Class B industrial building constructed in 2003. The building is a fully-heated, steel-framed building with metal panel exterior walls and a metal panel roof, 28’-38’ clear heights, 20 dock doors, two drive in doors, and a wet sprinkler system.
  • At closing we placed a 10 year non-recourse mortgage loan on the portfolio at a 4.04% rate, which is highly accretive for our shareholders.
  • The going in “cash” cap rate was 7.6%. The average or GAAP cap rate was 8.2%.

Property Photos

Investment Thesis

  • Great Location for Automotive Businesses – The two adjacent properties have immediate access to I-75, and I-275 providing great access the Auto manufacturing hubs of the greater Detroit area, Ontario Canada and Northern Ohio, where customers such as GM, Ford and Chrysler are located.
  • High Quality, Newer Assets – Built in 2003 and 2005, the properties are newer and feature high clear heights, a conventional configuration and ample loading capabilities which are desirable in today’s market.
  • Strong Tenant Became Stronger Post Closing – The Tenant is a joint venture between Johnson Controls and Chinese state-owned auto manufacturer SAIC. This JV is the largest automotive interiors business in the world. We were aware that this transaction was going to take place in advance of closing and this JV is now up and running, which has improved our tenant’s credit.
  • Very Strong Detroit Industrial Market, Low Vacancy Submarket – The Detroit area industrial market has performed very well over the past several years. Total vacancy at the end of 3Q 2014 was just 6.1%, and there was significant absorption of vacant space. The Monroe submarket consists of approximately 12 million square feet and has a vacancy rate of just 3.5%.
  • Below Market Rents in Strong Manufacturing Market – Asking rents per square foot were $4.66. Our tenant is paying $4.35 per square foot. Manufacturing is the largest and tightest segment of the Detroit industrial market.

Market Description

The Detroit area industrial market has performed very well over the past several years. According to CBRE, the overall Detroit area industrial market consists of approximately 500 million square feet of industrial space. Total vacancy at the end of 3Q 2014 was just 6.1%. Asking rents per square foot were $4.66 – Our tenant is paying $4.35 per square foot. In the overall market, net absorption over the last four quarters has been 6.5 million square feet. The Monroe submarket consists of approximately 12 million square feet and has a vacancy rate of just 3.5%.

Manufacturing is the largest and tightest segment of the Detroit industrial market, with just 5.3% vacancy in the 254 million square feet of inventory. Much of the vacancy is concentrated in older obsolete product. The buildings we acquired are “A” quality manufacturing buildings built in 2003 and 2005 and they should compete very well in the manufacturing market. The over 32 ft clear heights, cross dock configuration, and ample dock high loading and parking enable these properties to serve the higher end distribution market as well.

These properties are located at the Dixie Highway exit of I-75 and within 1 exit of the I-75 / I-275 split. This provides very good logistical capabilities for parts manufacturers to deliver parts to Big-3 Factories in the Detroit area, Western Michigan. Northern Ohio and into Canada (our tenant serves 8 different Big 3 factories in each of the locations listed above).

Tenant Description

The tenant, JCIM, LLC, is a Tier I and II supplier to original equipment manufacturers. It manufactures plastic automotive component parts such as instrument panels, floor consoles, door panels and other interior consoles for auto manufacturers. JCIM, LLC is now a significant subsidiary of a Joint Venture between Johnson Controls and Chinese state-owned auto manufacturer SAIC. This JV is the largest automotive interiors business in the world.

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