Newmark Facilitates $240M Industrial Joint Venture Between DRA Advisors and Burton Katzman; and go forward Programmatic Venture

Rhea-AI Summary

Newmark has successfully orchestrated a $240 million joint venture with DRA Advisors and Burton Katzman for the recapitalization of 24 industrial properties in the Midwest. The portfolio, exceeding 2.2 million square feet, boasts a 99% lease rate and an average lease term of five years. This initiative focuses on acquiring industrial assets with below-market rents to enhance value through strategic leasing, particularly in the automotive sector. Capital markets have responded positively to the transaction, highlighting a robust demand for such industrial assets.

Positive

• Joint venture of $240 million signifies strong market interest.
• Portfolio has a 99% lease rate and a five-year weighted average lease term.
• Diversified tenant base with no single tenant occupying more than 15% mitigates rollover risk.
• Focus on markets with below-market rents could generate substantial returns.

Negative

• None.

NEW YORK, March 6, 2023 /PRNewswire/ -- Newmark has arranged a $240 million joint venture (the "Venture") between the Sponsor, Burton Katzman and DRA Advisors for the recapitalization of 24 infill light industrial properties in the Midwest. The Newmark team was led by Vice-Chairmen and Co-Heads of Debt & Structured Finance Jordan Roeschlaub and Dustin Stolly, along with Director Eden Abraham. Executive Managing Director Daniel Canvasser from the Detroit office provided regional support on the transaction.

The 24-property industrial portfolio spans over 2.2 million square feet, is 99% leased with a five-year weighted average lease term (WALT) and features a diversified national tenant roster. With over 40 tenants on the rent roll, no tenant occupies more than 15% of the portfolio's square footage, mitigating rollover risk. Newmark also arranged the financing for this transaction.

The Venture will target value-add returns by acquiring industrial assets across the Midwest where rents are below market. DRA Advisors and Burton Katzam (the Sponsor) can create value through strategic leasing via their extensive relationships in the automotive industry. Additionally, Sponsorship will be developing and expanding the space of several assets in the seed portfolio.

"With a diversified rent roll and strong WALT, the seed portfolio is comprised of some of the most credit-worthy tenants in the automotive industry," commented Roeschlaub. "This opportunity was well received by the capital markets community and demonstrated the strong institutional investor demand for light industrial assets," added Stolly.

"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. 

The effort to raise capital for the Venture is part of Newmark's continued push into equity financing focused on raising capital for both platform and programmatic joint ventures.

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 is a registered investment advisor specializing in real estate investment and management services for institutional and private investors. As of September 30th, 2022, our team has approximately $13 billion in gross assets under management. Founded in 1986, DRA has unlocked success for its clients by focusing on conservative, value-added real estate investments in the office, retail, multifamily, and industrial sectors within the United States. Since its inception, the firm has acquired more than 1900 properties valued at over $37 billion.

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

FAQ

What was the amount involved in Newmark's recent joint venture?

Newmark facilitated a joint venture valued at $240 million.

How many properties are included in Newmark's recent recapitalization?

The recapitalization includes 24 light industrial properties.

What is the lease status of the properties managed by Newmark?

The portfolio is currently 99% leased.

What is the focus of the joint venture facilitated by Newmark?

The venture targets value-add returns by acquiring industrial assets with below-market rents.

Who are the partners involved in Newmark's recent venture?

The joint venture is between DRA Advisors and Burton Katzman.