Case Study Property 3
3-year hold / Current Yield 10.0% / Total Return 26.7%
Acquisition of a 6-property portfolio, leased to an investment grade credit, Fortune 200 tenant located throughout the US. Highlights Cardinal’s focus on tenant credit quality, and ability to align restructured leases with property exits in order to enhance investor returns.
Investment Overview
Investment Hold: 08/2010 – 01/2014
Investment Thesis: Investment represented the opportunity to acquire a six-property portfolio located in five of the most sought after logistics hubs in the US. The portfolio consisted of six bulk distribution centers totaling 4.7M square feet located in Atlanta, GA, Dallas, TX, Chicago, IL, Columbus, OH and Central PA. Each of the facilities was 100% leased to a credit rated Fortune 200 automotive manufacturer with 11 years of remaining term, and a high probability of renewal based on the mission critical nature of the facilities. The lease was structured as a master lease which featured a 12% rent increase in Year 2 of the hold, which was subsequently capitalized on the exit creating $24M in net value to investors.
Returns: Given the reduced risk associated with the credit tenant, the investment generated strong risk-adjusted returns over the 3 year hold period: 10.0% Cash-on-Cash, 26.7% Total Return and 1.9x Equity Multiple.
Transaction Overview
| Price | $178,676,617 |
| Price per Sft | $38 |
| Entry Cap Rate | 7.8% |
| Equity | $65,000,000 |
| Debt | $113,676,617 |
| Acquisition Strategy Type | Yield |
Investment Returns
| Net IRR (Leveraged) | 26.7% |
| Cash-on-Cash (Avg.) | 10.0% |
| Equity Multiple | 1.9x |
| Hold Period | 3 Years |
Property Overview
| Property Type | Warehouse |
| Year Built / Renovated | 1995 - 1999 |
| Total Square Feet | 4,699,878 |
| Occupancy | 100.0% |
| Lease Term Start | 2001 |
| Lease Term End | 2021 |
| Lease Structure | NNN |