Property Description

This acquisition consists of three industrial buildings totaling 320,838 square feet in Houston, TX; Charlotte, NC;  and St. Charles, MO, three target markets for Gladstone Commercial. The portfolio is 100% leased to Eastern Metal Supply Holdings, Inc. (Eastern Metal Supply or EMS).

  • The portfolio was acquired in a sale/leaseback transaction on January 27, 2020, for $34.57 million. The properties were 100% leased with a weighted average lease term of twenty (20) years at acquisition.
  • The Portfolio consists of three (3) functional single-tenant Class A/B industrial properties located within infill submarkets.
  • The Houston asset is a 137,960 square foot facility situated on 7.63 acres of land. The Property features 24’ clear heights, 12 (twelve) overhead doors and four (4) loading wells.
  • The Charlotte asset is a 114,978 square foot facility situated on 12.5 acres of land directly adjacent to I-85 and I-77. The Property features eight (8) drive-in doors, two (2) dock high doors, and includes ~3 acres of undeveloped land for future expansion.
  • The St. Charles asset is a 67,9900 square foot facility located on a 6.8-acre site. The Property features 24’ clear heights, five (5) drive-in doors,  and three (3) drive-in doors.
  • The going in or “cash” cap rate was 6.25%. The average or GAAP cap rate was 7.60%.

Property Images

Investment Thesis

  • Opportunity to acquire functional Class A/B institutional quality industrial assets located in strong infill submarkets. The three properties are well located in tight submarkets and feature fungible industrial building characteristics including multiple loading capabilities and excess land for expansions.
  • Mission Critical Real Estate. The Tenant uses the three properties for warehousing and distribution of aluminum extrusions. The three locations serve as the Tenant’s sole regional hubs in their respective markets.
  • Further expand sale-leaseback platform and serve as a partner to the Tenant. The transaction was completed with a repeat Sponsor and provided the Tenant with significant capital to invest into business operations. 
  • Increase portfolio returns and weighted average lease term (WALT) with a strong credit Tenant. The transaction generates accretive returns and increases the WALT for the portfolio with a 20 (twenty) year absolute net lease.

Market Description

Houston, TX

The Houston asset is located within the Houston city limits. The asset sits in a developed submarket (Northwest) with no available land parcels and in close proximity to Route 290, the Houston beltway, and Interstates 10, 69, and 45.This location affords the asset ease of access to the other major highways in the region, including I-45, I-10, and I-69, which taken all together run east/west and north/south through several other key southern markets. It also positions the property in a densely populated area, with access to a mass of urban and suburban rooftops adding appeal as a last-mile distribution location.

Charlotte, NC

The Charlotte asset is located adjacent to I-85 and within 0.25 miles of the I-85 and Beatties Ford Road interchange. Industrial rents in the I-85/Beatties Ford submarket have been among the fastest growing in the nation, climbing roughly 13.9% over fiscal year 2022. With a steady stream of demand, tight vacancies in the metro have contributed to the strong rent growth. The area immediately surrounding the Property consists of commercial and residential uses The Property benefits from its proximity to Charlotte CBD. The Property’s infill location and access to I-85 and CBD Charlotte makes it an ideal Property for last-mile delivery.

St. Charles, MO (St. Louis)

The ST. Charles asset is located immediately off MO 370 with direct access to the St. Louis CBD as well as having good access to I-70 and the St. Louis Beltway, I-270. The Property sits in close proximity to St. Louis Lambert International Airport. The Property is located in a small, established industrial park with tenants like FedEx, Sysco, Coca-Cola and Old Dominion Freight Line. With a long-term vacancy rate of 2.7%, St. Charles County has historically been one of the tightest industrial markets in St. Louis. That trend has continued even as developers have added new buildings to the submarket's inventory.

Tenant Description

Eastern Metal Supply is a value-added distributor of aluminum extrusions with a diverse product portfolio serving a variety of end markets. Founded in 1982, EMS is the industry leader in hurricane prevention systems, specifically focused on hurricane resistant shutters.

The Company’s product portfolio is sold to various end industries including general contractors, commercial businesses, and marine OEMs. The Tenant has operations across the United States with a specific focus on the South Central and Southeast. The acquired assets are utilized by EMS for the storage and distribution of its finished product. Additionally, the Houston and Charlotte properties feature fabrication areas. 

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