Challenge
Located within the Port of New Haven, the largest port in Connecticut, the Wheeler Street Complex comprises two buildings and provides a significant amount of employment in the city. The Wheeler Complex is a rare opportunity to hit the market, being one of the only available port properties in the country that is 100 percent occupied, is located at a competitive location site with docks for ships and transport cargo, and offers a diversified income stream from the buildings, outside parking, and waterfront. The seller achieved a substantial increase in the asset’s value due to new leases and capital improvements. As such, the seller was looking to capitalize on the investor demand for industrial service facilities (ISF), intending to reinvest the liquidated capital into more a passive investment. Because of the multiple streams of income from over 20 tenants, in addition to the potential to build a bulkhead and crane pier on the waterfront, the selling process involved heavy underwriting and review of due diligence. Estimating the asset’s value was also difficult due to the external storage component.
Strategy
With diligent research, industry-leading marketing, and a proprietary central database, the Matthews™ agents sourced a suitable buyer and successfully navigated the due diligence process. The brokers knew that the value-add potential to build a bulkhead and crane on the waterfront portion of the property would bring significantly more capital to the city, increasing their local GDP and overall improving the desirability of the asset. Matthews™ listed the complex on the market and positioned it with value-add components, driving higher offers than received off-market. By executing a marketing campaign, the Matthews™ agents generated maximum exposure and competition, capturing local buyers, IOS funds, and past industrial buyers. The buyer, Criterion Group LLC, was selected as they were very active in the outside storage market and were able to secure financing for the project.
Results
Thanks to Matthews™’ national reach, expertise, and private database, the brokers achieved a significant sale in the city of New Haven. With the patience from all parties due to the timing delays and the COVID-19 outbreak in the New York metro, the fully triple net lease asset sold for a substantial increase in price and came with a pre-approved construction permit, which can typically take months or years to receive. The sale achieved a cap rate record of all industrial sales in the New Haven metro, and the brokers negotiated market rent to continue running the seller’s business post-sale. By focusing efforts on sourcing new research for new buyers, the push for specialization in specific product types allowed the Matthews™ agents to have a keen understanding of ISF facilities and successfully close the project for all parties involved.
