Challenge

This cold storage property, located in Phoenix, AZ, comprises corporate-backed leases with long-term tenants, significant upside in rent, and sits adjacent to three major highways. The seller, a private client, wanted to unlock the property’s equity to focus on other expansion plans. The property listed at an aggressive cap rate, and two of the three tenants had less than two years remaining on their lease, which initially deterred investors.

 

Strategy

Through the use of Matthews™ proprietary marketing and extensive database, the agents procured multiple offers. Matthews™ identified a buyer in a 1031 Exchange looking for long-term security while expanding their industrial portfolio in Arizona. The property was initially planned to be delivered with two short-term leases expiring within two years. Matthews™ agents negotiated a ten-year absolute net master lease of the entire building. This restructuring allowed the seller tremendous flexibility to utilize the remaining building space or sublease the space to other parties as needed and allowed the buyer to acquire a high-performing asset in a highly desirable product type.

 

Results

Through the dedication and expertise of the Matthews™ representatives, a mutually beneficial outcome was achieved for both the seller and buyer through a sale leaseback transaction. The seller received an above-listing price offer from an out-of-state investor. The buyer satisfied his exchange and received security through a 10-year absolute net lease, giving the seller the option to either use the rest of the facility or sublease to other companies. The sale was the highest price point for a single property cold storage industrial deal in Phoenix in Q1 2021 and the second cold storage sale in the last 12 months in Maricopa County, according to CoStar. The Matthews™ Industrial Division generated an above-list price offer, which achieved an 86% return on investment for the seller, allowing reinvestment in their business and growth into new ventures.