Morgan Stanley Real Estate Investing Sells Four Warehouses on the U.S.-Mexico Border for $178 Million

Rhea-AI Summary

Morgan Stanley Real Estate Investing (MSREI), part of Morgan Stanley Investment Management, announced the sale of four fully leased warehouses near the U.S.-Mexico border for $178 million. The warehouses, located in El Paso and Laredo, Texas, total over 1.2 million square feet. The sale reflects increased demand for warehouse space due to a rise in manufacturing in Mexico and import activity into the U.S. Construction on these properties began in 2022. The El Paso warehouses, covering 735,000 square feet, are situated near the Zaragoza Bridge, while the Laredo properties, totaling 500,000 square feet, are near the World Trade Bridge. Both locations are key trade ports between the U.S. and Mexico.

Positive

• Sale of four warehouses for $178 million.
• Properties are fully leased.
• Total property area exceeds 1.2 million square feet.
• Located near significant trade ports: Zaragoza Bridge and World Trade Bridge.
• Addresses increased warehouse demand due to manufacturing shifts to Mexico.

Negative

• Potential loss of income from fully leased properties post-sale.
• Market dependency on manufacturing trends in Mexico and U.S. import activities.

Insights

Financial Analyst

The sale of four fully leased industrial properties for $178 million by Morgan Stanley Real Estate Investing (MSREI) highlights a strategic move capitalizing on the increased demand for warehouse space along the U.S.-Mexico border. This is particularly relevant given the current reshuffling of global supply chains and the rise in nearshoring trends, which involve relocating manufacturing closer to the U.S. to mitigate risks associated with international trade disruptions.

Financially, this sale generates a significant cash influx for MSREI, which could be reinvested in other high-growth opportunities. The properties' full lease status likely ensured a premium sale price, reflecting robust demand and implying strong future rental income streams for the buyers.

From an investor's perspective, this successful transaction underscores Morgan Stanley's ability to capitalize on current market dynamics and their strategic real estate investments. The completion of construction in 2022 and quick leasing and sale within a year demonstrate operational efficiency and keen market insight by MSREI, enhancing investor confidence in the fund’s management.

Market Research Analyst

The location of these properties near key border entry points like the Zaragoza Bridge Port of Entry in El Paso and the World Trade Bridge in Laredo is a critical factor in their high valuation. Laredo, in particular, being the number one trade port in the U.S., signifies that these warehouses are in prime logistical locations, essential for efficient supply chain operations. This sale underscores the strategic importance of border infrastructures in accommodating the increased flow of goods stemming from heightened manufacturing activities in Mexico.

The warehouse properties' proximity to major commercial border crossings ensures steady demand from logistics and distribution companies looking to streamline their operations. This trend aligns with broader market movements towards bolstering supply chain resilience and reducing shipping time and costs.

For retail investors, these insights highlight the growing importance of infrastructure and location in real estate investments, particularly in the industrial sector, which has seen increasing demand amidst global supply chain shifts.

NEW YORK--(BUSINESS WIRE)-- Morgan Stanley Investment Management, through investment funds managed by Morgan Stanley Real Estate Investing (MSREI), announced today the sale of a portfolio of four fully leased industrial properties, two located in El Paso and two in Laredo, Texas, for $178 million to two distinct institutional investors. The warehouses, which total more than 1.2 million square feet, are located within 10 miles of the United States’ border with Mexico, which is experiencing a sharp increase in manufacturing.

Commenting on the sales, Will Milam, Head of U.S. Investments at Morgan Stanley Real Estate Investing, said: “We are pleased with the successful development, leasing and sale of these warehouse assets. With a greater focus on supply chain resiliency, companies are increasingly seeking to diversify where they manufacture goods. One result has been a shift to manufacturing in Mexico and a dramatic increase in imports into the United States, which is propelling warehouse demand along the U.S. southern border.”

MSREI commenced construction on the four warehouses in 2022. The two El Paso properties total approximately 735,000 square feet and are located just three miles from the Zaragoza Bridge Port of Entry, which facilitates approximately 70% of loaded trucks crossing into the United States through Ciudad Juárez, Mexico, a top North American manufacturing hub.

Similarly, the two Laredo properties, totaling approximately 500,000 square feet, are located nine miles from the World Trade Bridge. Laredo’s primary commercial border crossing, World Trade Bridge is the number one overall trade port in the United States among the nation’s 450 international gateways for trade.

Eastdil Secured and Newmark advised on the sale of the El Paso and Laredo properties, respectively.

About Morgan Stanley Real Estate Investing
Morgan Stanley Real Estate Investing (MSREI) is the global private real estate investment management business of Morgan Stanley. One of the most active property investors in the world for over three decades, MSREI employs a patient, disciplined approach through global value-add/opportunistic and regional core real estate investment strategies. With 17 offices throughout the U.S., Europe and Asia, regional teams of dedicated real estate professionals combine a unique global perspective with local presence and significant transaction execution expertise. MSREI currently manages $53 billion of gross real estate assets worldwide on behalf of its clients.

About Morgan Stanley Investment Management
Morgan Stanley Investment Management, together with its investment advisory affiliates, has more than 1,300 investment professionals around the world and $1.5 trillion in assets under management or supervision as of March 31, 2024. Morgan Stanley Investment Management strives to provide outstanding long-term investment performance, service, and a comprehensive suite of investment management solutions to a diverse client base, which includes governments, institutions, corporations and individuals worldwide. For further information about Morgan Stanley Investment Management, please visit www.morganstanley.com/im.

About Morgan Stanley
Morgan Stanley (NYSE: MS) is a leading global financial services firm providing a wide range of investment banking, securities, wealth management and investment management services. With offices in 42 countries, the Firm’s employees serve clients worldwide including corporations, governments, institutions and individuals. For further information about Morgan Stanley, please visit www.morganstanley.com.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240514137565/en/

Media Relations Contact: Alyson Barnes, +1 212 762-0514, alyson.barnes@morganstanley.com

Source: Morgan Stanley Investment Management

FAQ

What properties did Morgan Stanley Real Estate Investing sell?

MSREI sold four fully leased warehouses in El Paso and Laredo, Texas.

How much did Morgan Stanley sell the warehouses for?

The warehouses were sold for $178 million.

How large are the properties sold by Morgan Stanley Real Estate Investing?

The properties total over 1.2 million square feet.

When did Morgan Stanley Real Estate Investing begin construction on the warehouses?

Construction began in 2022.

Why is there increased demand for warehouses near the U.S.-Mexico border?

Increased manufacturing in Mexico and higher import activity into the U.S. have driven demand for warehouses.