ElmTree Funds (“ElmTree”), a real estate private equity manager, announced the sale of a majority position in a portfolio of predominantly industrial and office properties to Guggenheim Investments (“Guggenheim”). The gross asset value of the 18-property portfolio is approximately $900 million.
ElmTree first began acquiring and developing these properties in 2016. Located in fast-growing metropolitan areas across the United States, this portfolio of build-to-suit net lease properties offers a steady income stream and capital appreciation over the long term. As part of the transaction, ElmTree will manage the assets for Guggenheim and maintain a small equity portion.
CEO and Founder of ElmTree Funds James Koman commented, “As the uncertain rate environment continues, pensions and other institutional investors have demonstrated a deep appetite for current and predictable income streams. The yields we’re seeing from real estate leased to investment grade tenants provide a compelling alternative to corporate equivalent bond yields, while offering potential upside.”
ElmTree Funds is a widely recognized expert in the net lease sector, with a focus on build-to-suit projects and new construction. Its expertise in commercial real estate development, capital markets, and asset management enables it to optimize risk-adjusted returns for institutional investors.
Notable properties in the portfolio include:
- 1.5 million square foot industrial facility net leased to a multi-billion U.S.-based confectionary manufacturer. The major distribution facility, located in Dallas, TX, is the first for the company in the region and the largest in its network, playing a key role in its US distribution plans. The lease is held by the parent company, which is rated A+. The asset is triple-net-leased for 11 years.
- 500,000 square foot industrial facility net leased to a multi-billion U.S.-based multinational courier delivery services company. It is located in St. Louis, MO near Lambert International Airport, easily accessible via three interstates. The lease is held by the parent company, which is rated BBB. The asset is triple-net-leased for a period of 14 years.
- 375,000 square foot industrial facility net leased to a multi-billion U.S.-based corrugated packaging company. It is located in Valley, AL, right off I-85, providing access to markets nearby including Atlanta, GA and Birmingham, AL. The lease is guaranteed by the tenant’s parent company, which is rated BBB. The asset is triple-net-leased for a period of 11 years.
Jennifer Marler, Senior Managing Director and Head of Real Estate at Guggenheim Investments added, “We are delighted to partner with ElmTree and benefit from its differentiated approach to commercial real estate in our pursuit to drive value for our clients.”
This recapitalization by Guggenheim marks the third such transaction ElmTree’s managing partners have executed in the past 10 years.
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