El Paso Portfolio

Introduction

Equity Industrial Partners (EIP), in partnership with Raith Capital Partners, achieved remarkable success with the El Paso Portfolio, demonstrating their expertise in industrial real estate investment and development. This case study highlights the strategic acquisition, repositioning efforts, and exceptional returns achieved over a two-year investment hold period.

Strategic Acquisition and Portfolio Repositioning

In Q3 2019, EIP and Raith Capital Partners acquired the El Paso Portfolio in two separate transactions. The first acquisition was from IDI Logistics for $102.75 million, while the second was from a local owner/developer for $19.7 million, totaling a $122.45 million investment. The portfolio consisted of twenty-four buildings totaling approximately 2.2 million square feet, with an average in-place rent of $4.01 per square foot and a weighted average lease term of less than two years.

Leasing Strategy and Value Enhancement

Upon acquisition, the portfolio was strategically repositioned through a carefully planned marketing and leasing strategy. EIP and Raith successfully increased the weighted average rents at sale to over $5.50 per square foot, representing a 30% increase over rents at acquisition. Within two years, the portfolio was fully leased, boasting a weighted average lease term of more than four years.

Exceptional Returns and Profitable Disposition

In Q4 2021, EIP and Raith Capital Partners sold the El Paso Portfolio to Link Logistics for $232 million, translating to $105 per square foot and a 4.5% cap rate. The sale resulted in a 3.5x multiple on investment over the two-year hold period, a testament to the successful repositioning and leasing efforts.

Future Growth and Development

EIP and Raith Capital Partners are continuing to create value by constructing two additional buildings totaling approximately 304,000 square feet on the remaining residual land parcels. All three buildings were fully leased prior to completion of construction in summer of 2023.

Conclusion

The El Paso Portfolio case study exemplifies Equity Industrial Partners' expertise in industrial real estate investment and development. The strategic acquisition, repositioning efforts, exceptional returns, and ongoing growth initiatives demonstrate EIP's commitment to delivering superior value and performance.