Alliance Logistics portfolio is a core portfolio of seven class A industrial assets in the Dallas metro area. The portfolio was 100% leased at acquisition, with in-place rent estimated to be 21.9% below comparable rents in the market, providing mark-to-market opportunity. The acquisition basis for the portfolio is $109.80 per square feet, which is 17% below estimated replacement cost.
The rent roll is comprised of 10 tenants from a variety of industries, including aircraft seating manufacturing, food and beverage distribution, healthcare and pharmaceuticals, third-party logistics, and home securities systems. Due to this industry diversity, we believe the portfolio is well-insulated from economic changes. The tenancy has an attractive credit profile, with multiple tenants maintaining investment grade credit ratings.
The seven buildings have an average building vintage of 2000. The portfolio consists of six light industrial assets and one bulk building.
The submarket of Alliance has emerged as one of Dallas-Fort Worth’s (DFW) primary industrial nodes, with close proximity to Alliance Airport, and two domestic rail service lines. The submarket also has access to I-35, and multiple highways which conveniently connect Alliance to the Dallas-Fort Worth (DFW) airport, Denton, and McKinney. Effective vacancy in the submarket is 2.6% at time of acquisition.
The portfolio is an off-market opportunity to gain scale, at a significant discount to replacement cost, in the second-largest industrial market in the U.S. The 100% leased portfolio, with minimal planned capital expenditure, we believe it can provide a durable cash flow stream, and help GCREIT maintain a strategic overweight to well-located, industrial real estate with strong underlying fundamentals .
Dallas is now the fourth largest metropolitan area in the U.S., with a population of 7.9 million, and it is also one of the fastest growing metro areas, having added 1.2mm new residents over the past ten years.
The Dallas-Fort Worth (DFW) industrial market continues to perform strongly and has seen the highest net absorption of the top 100 largest markets, with 34.4mm square feet of net absorption over the last 12 months. The market’s 14.2% annual rent growth over the same time period is among one of the strongest of large U.S. metros.