Vance, AL Industrial Facility


Vance, AL Industrial Facility

Property Description

In May 2013, we acquired a 170,000 square foot light industrial building in Vance, AL. for $13,336,250 ($78.45 per square foot) from Roebuck Buildings Co. Inc., a South Carolina based development firm.

  • The property sits one mile from the tenant’s primary customer, Mercedes-Benz, served by the property, and is located in the Birmingham-Hoover MSA.
  • A new 10-year lease, written by Gladstone Commercial, was executed at acquisition, with an initial expiration of May 2023. The going-in “cash” cap rate was 8.00% and the average cap rate over the initial lease term was 8.76%.
  • In October 2016, the tenant exercised the expansion option in the lease. 75,000 square feet were added to the property, which was completed in May 2017. With the completion of the expansion, the lease for the entire facility was re-set to 10 years. The cost to complete the expansion was $6.6MM.
  • The post-expansion “cash” cap rate was 9.50%, and the average cap rate over the life of the expanded lease term is 10.40%.

Property Photos

Investment Thesis

  • Mission Critical Real Estate – The tenant had been awarded a contract to be an exclusive seating component provider to Mercedes-Benz U.S. International’s (MBUSI) factory in Vance, AL; the property is located 1 mile from the MBUSI plant
  • Strong Credit –At the time of acquisition, the tenant had $14B+ in revenue and $1B+ in EBITDA
  • Strong Commitment to our Building – The tenant had invested eight months of pre-development resources for plans and permits for the property
  • Ability to Expand Site – We anticipated the potential growth need of our tenant and included additional land at the time of acquisition

Market Description

The property is located in Vance, AL. Vance, AL is part of the Birmingham-Hoover MSA, the center of one of the nation’s major car manufacturing regions. The property is strategically located approximately 25 miles from Birmingham, AL and one mile from the multi-billion dollar MBUSI plant. The region’s comprehensive interstate transportation network and central proximity in the southeastern United States creates logistical advantages for major distribution facilities

Tenant Description

The tenant is a publicly traded manufacturer and engineer of seating, electrical distribution, and related components to the car manufacturing industry worldwide. The tenant specializes in “just-in-time” delivery and is a tier-1 supplier in the industry. The tenant ended FY 2016 with $18.6B in revenue and net income of $975.1MM.

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