Newmark Facilitates $150M Acquisition Loan for 2.2M SF Industrial Portfolio for DRA Advisors and Burton Katzman

Rhea-AI Summary

On March 8, 2023, Newmark announced the arrangement of approximately $150 million in financing for the acquisition of a 2.2 million square foot industrial property portfolio in the Midwest by Burton-Katzman and DRA Advisors. The portfolio is currently 99% leased, with tenants averaging over ten years of occupancy. This financing highlights the ongoing strength of the industrial real estate market, particularly in the Detroit area, which has experienced double-digit rent growth post-pandemic. The acquisition aligns with investor interest in industrial assets in secondary markets.

Positive

• The Portfolio is 99% leased with a five-year weighted average lease term.
• Occupancy levels have remained above 99% for the past decade.
• The acquisition facilitates investment in a solid industrial real estate portfolio in a high-demand area.

Negative

• None.

NEW YORK, March 8, 2023 /PRNewswire/ -- On behalf of Burton-Katzman and DRA Advisors, Newmark has arranged approximately $150 million of financing proceeds to facilitate the acquisition of 24 strategically located industrial properties across the Midwest (the "Portfolio"). The Newmark team was led by Co-Heads of Debt & Structured Finance, Jordan Roeschlaub and Dustin Stolly, along with Senior Managing Director Chris Kramer. Protective Life, Old National Bank and One America originated the loans.

The Portfolio spans 2.2 million square feet, is currently 99% leased with a five-year weighted average lease term (WALT) and features a diversified national tenant roster. The combination of single and multi-tenant commercial properties has a proven track record of long-term stability; the Portfolio has retained occupancy levels above 99% for the past decade, with current in-place tenants averaging over ten years in their space. With over 40 tenants on the rent roll, no user occupies more than 15% of the Portfolio's square footage, effectively mitigating rollover risk.

"Investment in industrial real estate by institutional owners remains a top-choice asset class for investors, especially those in secondary and tertiary markets that still offer growth potential," said Stolly.

The Detroit industrial market continues to experience strong market fundamentals; vacancy rates continue to sit near all-time lows, generating double-digit rent growth year-over-year post-pandemic. The Portfolio features assets across dense industrial hubs with the highest barriers to entry, including Auburn Hills, Sterling Heights, Dearborn and Livonia.

The Burton-Katzman team has successfully operated the Portfolio historically and developed extensive relationships with the existing tenancy, allowing them to create strategic leasing transactions as the preeminent operator of light industrial across the Detroit Metro. DRA Advisors has an extensive track record, including over 84 million square feet of industrial acquisitions since its inception.

"The Portfolio represents a highly compelling opportunity to acquire a dynamic, well-occupied, and cash-flowing light industrial portfolio at an attractive basis with a best-in-class joint venture partner," explained Brett Gottlieb, Managing Director for DRA Advisors. 

About Burton-Katzman

Burton-Katzman is a fully integrated real estate company with extensive experience and expertise across property acquisition, planning and development, project and construction management, strategic planning and asset management. With over 110 years of history in the real estate industry, with an emphasis on the industrial market, Burton-Katzman has become well versed in effectively building and managing properties across various asset classes.

About DRA Advisors

DRA Advisors LLC is a New York-based registered investment advisor with approximately 95 employees specializing in real estate investment management services for institutional and private investors, including pension funds, university endowments, sovereign wealth funds, foundations, and insurance companies. Since DRA was founded in 1986, the firm has opened additional offices in Miami and San Francisco while acquiring over $37.8 billion of real estate. The acquisitions include 84 million square feet of industrial, 65 million square feet of office, 87 million square feet of retail and 84,000 multifamily units. As of September 30, 2022, DRA has $12.3 billion in gross assets under management. http://draadvisors.com

About Newmark

Newmark Group, Inc. (Nasdaq: NMRK), together with its subsidiaries ("Newmark"), is a world leader in commercial real estate, seamlessly powering every phase of the property life cycle. Newmark's comprehensive suite of services and products is uniquely tailored to each client, from owners to occupiers, investors to founders, and startups to blue-chip companies. Combining the platform's global reach with market intelligence in both established and emerging property markets, Newmark provides superior service to clients across the industry spectrum. Newmark generated revenues of approximately $2.7 billion for the year ending December 31, 2022. Newmark's company-owned offices, together with its business partners, operate from approximately 180 offices with nearly 6,700 professionals around the world. To learn more, visit nmrk.com or follow @newmark.

Discussion of Forward-Looking Statements about Newmark

Statements in this document regarding Newmark that are not historical facts are "forward-looking statements" that involve risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements. These include statements about the effects of the COVID-19 pandemic on the Company's business, results, financial position, liquidity and outlook, which may constitute forward-looking statements and are subject to the risk that the actual impact may differ, possibly materially, from what is currently expected. Except as required by law, Newmark undertakes no obligation to update any forward-looking statements. For a discussion of additional risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see Newmark's Securities and Exchange Commission filings, including, but not limited to, the risk factors and Special Note on Forward-Looking Information set forth in these filings and any updates to such risk factors and Special Note on Forward-Looking Information contained in subsequent reports on Form 10-K, Form 10-Q or Form 8-K.

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SOURCE Newmark Group, Inc.

FAQ

What was the purpose of Newmark's financing arrangement on March 8, 2023?

The financing arrangement was to facilitate the acquisition of a $150 million industrial property portfolio across the Midwest.

How large is the industrial property portfolio acquired by Burton-Katzman and DRA Advisors?

The acquired portfolio spans 2.2 million square feet.

What is the current occupancy rate of the industrial properties in the newly acquired portfolio?

The portfolio is currently 99% leased.

What are the key characteristics of the tenants in the acquired portfolio?

Tenants in the portfolio average over ten years in their space, contributing to long-term stability.

Who led the financing team at Newmark for this acquisition?

The financing team was led by Jordan Roeschlaub and Dustin Stolly.