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Completed Equity
Industrial
Jackson Industrial Park
Indianapolis, IN
INVESTMENT STRATEGY
Core Plus
INVESTMENT TYPE
Equity
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100% funded
Offered By Brennan Investment Group
17.7%* TARGET IRR 16.0%-18.0%
8.0%* TARGET AVG CASH ON CASH
* TARGET EQUITY MULTIPLE
Estimated Hold Period 3 years
Estimated First Distribution
*Please carefully review the Disclaimers section below, including regarding Sponsor’s assumptions and target returns
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Overview
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Brennan Investment Group

Brennan Investment Group, LLC (“Brennan Investment Group” or the “Company”) is a private real estate investment company headquartered in Chicago, Illinois. Brennan Investment Group was formed in 2010. Its Managing Principals are comprised primarily of former First Industrial Realty Trust (NYSE: FR) founders and executives. Since 2010, the Company has purchased more than $800 million in industrial real estate, partnering with institutional capital providers such as California State Teachers Retirement System (CalSTRS), Gatehouse Bank and DLJ Real Estate Capital Partners.

The Company’s current portfolio spans 21 states, encompasses over 12.8 million square feet (with an additional 3 million under management), and currently has an occupancy rate of 98.7%. Brennan Investment Group acquires, develops and operates industrial real estate in select major metropolitan markets throughout the United States, including Central Florida, Chicago, Northern New Jersey, Southern California, Texas and Washington, D.C. The Company’s experienced principals utilize a disciplined investment approach in selectively identifying opportunities that look to achieve risk-adjusted returns for investors. Brennan Investment Group believes that industrial real estate is a large, stable and diversified investment class that offers a compelling opportunity for both current income and appreciation across a variety of industrial property types.

Track Record

http://brennaninvestmentgroup.com/
  • Michael W. Brennan
  • Scott McKibben
  • Robert Vanecko, Managing Principal
  • W. Troy MacMane
  • Tim Gudim
  • Robert J. Krueger
  • Tod Greenwood
  • Allen Crosswell
  • Brad O'Halloran, Executive Director of Investor Relations, Managing Principal
Michael W. Brennan

Michael W. Brennan is a Co-Founder, Chairman, and Managing Principal of Brennan Investment Group. Mr. Brennan has orchestrated more than $10 billion in industrial real estate transactions in the course of his 25-year career.

Prior to forming Brennan Investment Group, Mr. Brennan co-founded First Industrial Realty Trust (NYSE: FR) in 1994, and served as President, Chief Executive Officer and a member of the Board of Directors until late 2008. Under his direction First Industrial assisted many of the nation’s largest industrial users in completing complex supply chain reconfigurations, and attracted investment partners including The Carlyle Group, the Kuwait Finance House, Union Bank of Switzerland, ING, and the California State Teachers’ Retirement System.

Under his direction, The Guide to Classifying Industrial Property Types was written. The only book of its kind, the guide presents a precise classification system for industrial properties and provides an in-depth review of the characteristics and evolution of the industrial property sector. The Urban Land Institute (ULI) acquired the rights to the guide and collaborated with First Industrial on a second edition, which is currently available through ULI.

Often sought as an industry expert on industrial real estate, Mr. Brennan has appeared on CNBC, CNNfn and Bloomberg Television. Mr. Brennan is a prominent leader in the real estate community and is a member of ULI and the World’s Presidents Organization. Mr. Brennan was named Commercial Property News’ ‘Industrial Property Executive of the Year’ in 2000 and one of Irish American Magazine’s Top 100 Business Leaders in America in 2003.

Before co-founding First Industrial, Mr. Brennan was a President and Partner in The Shidler Group, a nationally prominent real estate firm specializing in value-add real estate transactions. He was a founding investor of Tri-Net Property Trust and Co-Founder and member of the Board of Directors for Pacific Office Properties (AMEX: PCE), an office REIT that owns institutional quality properties in Hawaii, California, and Arizona. Mr. Brennan is a former member of the Board of Directors of the Chicago Public Library Foundation, which provides on-going funding, through its endowments and annual fundraising, for collections, book acquisition and a variety of community-based programs that contribute to the excellence of the Chicago Public Library. He began his industrial real estate career in 1984, as an Investment Specialist with CB Commercial. Mr. Brennan earned his Bachelor’s degree in Finance from the University of Notre Dame in 1979.

Mr. Brennan currently serves as Executive Director of the University of Wisconsin’s James A. Graaskamp Center for Real Estate, a program that is consistently ranked among the best real estate programs in the world.

Scott McKibben

Scott McKibben is a Managing Principal of Brennan Investment Group. He is responsible for industrial property transactions in the Midwestern United States, with a focus on Chicago. Mr. McKibben was the Co-Founder of Madison Partners Realty, which purchased, managed, and leased over 4 million square feet of industrial buildings in primarily the Chicago and Milwaukee markets.

As a principal of Madison Partners Realty and before that as the Vice-President of Acquisitions of Prime Group Realty Trust, Mr. McKibben completed the acquisition and development of $2 billion in office and industrial properties. In addition, Mr. McKibben has been hired as an expert witness twice on $100 million plus lawsuits and has provided financial proforma and financing consulting with several developers and owners of office, multi-family, condominium, and hotel projects.

Mr. McKibben earned his Bachelor’s B.S. in Finance in 1991 from DePaul University, his M.S. in Real Estate Appraisal and Investment Analysis in 1994 from University of Wisconsin Graduate School of Business and his Juris Doctor in 1994 from University of Wisconsin Law School. Mr. McKibben is an Illinois and Wisconsin licensed attorney.

Robert Vanecko, Managing Principal

Robert Vanecko is a Managing Principal of Brennan Investment Group and is also the head of Brennan’s single-tenant, net lease division. Mr. Vanecko has extensive experience in a wide variety of real estate and corporate transactions as a principal, investment banker, and attorney. Since 1993, he has been involved in the structuring, negotiation, and execution of over forty separate transactions with a total value of over $3 billion. Mr. Vanecko combines his background in finance, capital markets and law to analyze, structure, negotiate and implement diverse and complex investment transactions.

Prior to Brennan Investment Group, Mr. Vanecko was a co-founder and co-general partner of DV Urban Realty Partners I L.P. (“DV”), a $71.5 million real estate private equity fund. DV invests in value-added urban real estate transactions, primarily in Chicago. Along with the other sponsors of DV, Mr. Vanecko directed the day-to-day operations of the fund, including investment sourcing, evaluation and execution, asset management, finance, and administration. The fund’s portfolio of investments and developments includes over 800 residential units and over 500,000 square feet of commercial space. Mr. Vanecko also co-founded and managed the fund’s property management affiliate – DV Property Management, LLC. Mr. Vanecko has a B.A. degree from Yale University and a J.D. degree (magna cum laude) from Northwestern University School of Law. He serves on the boards of several charitable and civic organizations.

W. Troy MacMane

With more than two decades of real estate experience, Troy directs investment, operations, portfolio management, sales and development activity in Texas, Colorado and Arizona. Prior to forming Brennan Investment Group, Mr. MacMane was the co-founder and manager of Trident Equity Partners. Prior to forming Trident, Mr. MacMane was Regional Director at First Industrial. At First Industrial, Mr. MacMane was head of the company’s acquisition and development program in the southern portion of Texas and responsible for all aspects of portfolio management.

Mr. MacMane began his career at CB Commercial in Houston and then Trammell Crow Company in Austin. Troy has acquired and developed over $1 billion of industrial assets totaling over 30 million square feet and 525 acres of land. Troy was a recipient of a “Top Producer Award” at First Industrial and in 2007 he received First Industrial’s “Deal of the Year Award”. Mr. MacMane received Weingarten Realty’s Producer of the Year and served on the Board of Directors for NAIOP in the Houston Chapter. Mr. MacMane graduated from the University of Texas at Austin in 1991 and attended St. Thomas University’s MBA program.

Tim Gudim

Tim Gudim is a Managing Principal of Brennan Investment Group. He is responsible for industrial property investments in the Western United States, with a primary focus on Southern California.

Tim began his industrial real estate career in 1982 with Pacifica Holding Company, an investment and development company based in Los Angeles. In 1990, Tim moved to Denver to help grow Pacificas’ commercial real estate investment and management operations in that market. From 1990-1997, he was instrumental in buying and developing a portfolio of industrial, office and retail properties which grew to be the largest privately owned portfolio in Denver totaling 8.5 million square feet. The Pacifica Denver industrial portfolio consisting of 4.5 million square feet was sold to First Industrial Realty Trust, a publically traded REIT in November, 1997.

Through the First Industrial transaction, Tim became responsible for overseeing all aspects of First Industrials Denver Portfolio and 26 person staff as Regional Director. In June, 1998, Tim was promoted to Senior Regional Director and was granted increased responsibility to manage and grow First Industrial’s portfolios and offices in Dallas, Houston, New Orleans, Phoenix, and Salt Lake City. In December 1998, First Industrial promoted Tim to Managing Director-West Region to expand the company’s investment and development objectives and open new regional offices in the major West Coast markets. During his tenure at First Industrial, Tim acquired portfolios and opened regional offices in Los Angeles, San Diego and Portland, while also acquiring properties in San Francisco. Several of the transactions Tim led involved joint venture arrangements with partners including The Carlyle Group, Apollo Real Estate Advisors, GE Capital and Heller Financial. Over the course of a 31 year career, Tim has orchestrated over $1 billion in commercial real estate transactions in excess of 60 million square feet, spanning multiple Western regional markets including Los Angeles, San Diego, San Francisco, Denver, Portland, and Phoenix.

Mr. Gudim earned his Bachelor of Arts degree in Economics from The University of California at Los Angeles (UCLA) in 1982.

Robert J. Krueger

Robert J. Krueger is a Co-Founder and Managing Principal of Brennan Investment Group. He is responsible for industrial property transactions in Central Florida. Mr. Krueger is among the most accomplished industrial professionals in the Florida market, with 37 years of experience in construction, development, and acquisitions. From 1997 to 2009, Mr. Krueger was the key executive in building First Industrial’s portfolio in Central Florida. During his tenure with First Industrial Mr. Krueger acquired and developed over 5 million square feet of industrial and flex space in the Florida market for such tenants as Home Depot, J.C. Penney, Caterpillar Tractor, Haverty’s Furniture and Walgreen’s. Before leaving First Industrial, Mr. Krueger was in charge of managing First Industrial’s Florida portfolio of nearly 3 million square feet, and 821 acres, in Tampa, Orlando and Miami.

Based in First Industrial’s Tampa office, Mr. Krueger started his First Industrial career as Senior Regional Development Officer for the Florida region, with the additional responsibility to oversee construction of First Industrial’s major projects throughout the United States. He came to First Industrial in 1997 through the company’s acquisition of Thompson-Kirk Properties (TKP), where he was Vice President and General Manager of TKP’s construction company.

Earlier in his career, Mr. Krueger served as Vice President of Commercial and Industrial Properties at Florida Design Communities and, previously, worked with Cadillac Fairview Industrial Development.

A member of the 2009 NAIOP National Board of Directors and past President of the Tampa Bay Chapter of the National Association of Industrial and Office Properties (NAIOP), Mr. Krueger is also an active member of the Real Estate Investment Council (REIC), NAIOP Build to Suit Forum and Leadership Tampa Bay. In 2006 and 2007 Mr. Krueger was named Developer of the Year by the Tampa Chapter of NAIOP.

Mr. Krueger earned a Bachelor’s degree in Structural Engineering from Marquette University in 1972. He is a licensed real estate broker, a licensed professional engineer in Florida, Hawaii and Wisconsin, and holds a Florida Class A general contracting license.

Tod Greenwood

Tod Greenwood is a Managing Partner of Brennan Investment Group. He is responsible for industrial property transactions in Texas, with a focus on Houston, Dallas, San Antonio, and Austin. Prior to joining Brennan Investment Group, Mr. Greenwood was the co- founder and manager of Trident Equity Partners. Prior to forming Trident, Mr. Greenwood worked in the industrial division of the Trammell Crow Company where he was an industrial leasing broker from 1993 to 1998, focusing on landlord representation. In 1999, Mr., Greenwood was asked to run the industrial development program for the Houston office of Trammell Crow Company. As Vice President for industrial development, Mr. Greenwood developed a variety of product types including cross-dock, dock-high rear load and bulk distribution buildings.

Mr. Greenwood graduated from the University of Texas with a Bachelor of Business degree in 1988, and the University of Texas Graduate School of Business with a Master of Business Administration degree in 1993.

Allen Crosswell

Allen Crosswell, a Managing Principal of Brennan Investment Group as well as founder of Crosswell/ Greenwood Development, is a leader in the Houston real estate brokerage and investment community. Previously co-founder of TGB Crosswell, Allen has a significant track record of identifying and executing successful raw land investment and development opportunities. His ability to pinpoint the key issues in a deal and to work through those issues in a way that is agreeable and even beneficial to all parties involved is a recurring theme in the transactions Allen has completed.

A native Houstonian, Allen believes in the value of long-term relationships and that fair business dealings lead to repeat business. By employing this philosophy, he has gained the confidence of landowners, investors, brokers and retailers within the real estate community and has produced consistent year in and year out results for his clients and investors in both the land brokerage and development arenas. Allen was also co-founder of Crosswell Torian Commercial Properties, LLC., which specialized in commercial land brokerage. From July 1989 through December 1992, he worked as a consultant with Lewis Realty Advisors, Inc. Allen received his Bachelor of Business degree from the University of Mississippi. 

Brad O'Halloran, Executive Director of Investor Relations, Managing Principal

Brad O'Halloran is the Executive Director of Investor Relations and a Managing Principal of Brennan Investment Group. Mr. O’Halloran has a wide range of business, educational and government service experience. 

Mr. O’Halloran formerly served, as Regional Director of Development for the University of Notre Dame, cultivating key high-level benefactors for the University and representing it’s various interests within the Chicago Metropolitan area. Prior to joining the University, Mr. O’Halloran held the position of Senior Vice President and Director of Corporate Development for Duty Free International and its successor company World Duty Free, a wholly owned subsidiary of BAA, plc.  In this capacity, Mr. O’Halloran, oversaw all mergers and acquisition activity for the corporation as well as strategic marketing and key partnership development.

Mr. O’Halloran came to Duty Free International when he merged his specialty retail operation, Sports Section Inc. with DFI in 1989. He was subsequently involved in the successful IPO of Duty Free International on the NYSE in 1993 and it’s subsequent sale to BAA plc. in 1999.

Mr. O’Halloran has been a serial entrepreneur throughout his career with interests in over 19 companies and current interests in half a dozen in various stages of development.

Mr. O’Halloran currently serves on the Board of Directors for Old Plank Trail Bank, a subsidiary of Wintrust Financial Corporation. In addition he is a former member of the Board of Directors of the Airports Council International, the International Visitors Center of Chicago and the Chicago Chamber of Commerce. He also served as a member of the board of the Village of Orland Park, Metra and of the State of Illinois Architectural Licensing Board.

Mr. O’Halloran holds a Bachelor’s Degree, as well as a Masters, Business Administration (Magna cum Laude) from the University of Notre Dame.

Track Record

Business Plan
Property

At A Glance

Investment Strategy: Buy, Stabilize and Sell
Projected Hold Period: 3 years
Total Project Budget: $8,727,778
Property Type: Industrial
Net Rentable Area: 260,400 Square Feet
Distributions to Realty Mogul 22, LLC: 10% IRR hurdle rate, with excess cash flow and appreciation shared 60/40
Going-In Cap Rate: 8.6% (based on Year 1 income)

Investment Details

Brennan Investment Group ("BIG" or "the Sponsor") plans to acquire and lease up Jackson Industrial Park ("the Property"), a 260,400 square foot light industrial portfolio comprised of four buildings located in the East submarket of Indianapolis, IN.  The property is located in close proximity to the intersection of I-465, which provides access to downtown Indianapolis and the surrounding suburbs, and I-70, which connects Indianapolis to Ohio, Illinois and beyond (ideal for regional distributors). Realty Mogul investors are being provided the opportunity to invest in Realty Mogul 22, LLC.  Realty Mogul 22, LLC will be making an investment in Jackson Industrial LLC, which will hold title to the Property.

Through Jackson Industrial LLC, BIG will handle all aspects of the investment including acquiring the property, implementing a property management and leasing program, and ultimately selling the property. The operating plan includes improving the appeal of the property to current and prospective tenants with parking lot repairs and cosmetic upgrades to the common areas, as well as hiring a local leasing team to leverage the strong submarket fundamentals and bring the Property to stabilization. The Property has been institutionally owned, managed, and is in good condition and has a variety of suites ranging from 1,600 to 32,000 square feet in size.

BIG plans to hold the property for three (3) years before exiting the investment, but the hold period could be longer or shorter. Realty Mogul investors have the opportunity to participate as equity stakeholders and earn a share of the cash-flow and appreciation. Investors may expect to receive quarterly updates and quarterly distributions, with the first distribution expected in February 2015 and on a quarterly basis thereafter.

Jackson Industrial Park represents a unique opportunity to invest in an well-located industrial portfolio in a strong submarket of Indiana. Because the property is currently 77% occupied, this transaction provides an opportunity for value creation through lease-up over the anticipated three (3) year hold period.

Investment Highlights

  • Experienced Sponsorship: Founded in 2010, Brennan Investment Group is a private real estate investment company that specializes in acquiring, developing and operating industrial real estate in major metro markets throughout the United States. They have partnered with institutional capital partners such as Trigate, Gatehouse Bank and DLJ Real Estate Capital Partners, and have purchased over $800 million of industrial real estate. Their current portfolio spans 21 states, encompasses over 12.8 million square feet of industrial product, and has an occupancy rate of 98.7%.
  • Location Near Major Transportation Routes: The Property is strategically located near major transportation arteries that connect the Property to major local and national destinations. The buildings are situated at the Northeast intersection of I-465 (the outer “loop” on Indianapolis, which provides for excellent access to downtown and the surrounding suburbs) and I-70 (the east/west interstate that connects Indianapolis to Ohio to the east and Illinois and Missouri to the west which is ideal for regional distributors). Access to these interstates provides excellent connectivity to many major Midwest transportation routes, including I-65, I-70 and I-74, providing access to 75% of the US population within a one day drive.
  • Value Enhancement Potential: Due to the fact that the Property is not currently stabilized, this transaction provides investors the opportunity to participate in a value add transaction of an industrial portfolio. By leasing the existing vacancy of the Portfolio at market rents, the income can be increased by approximately $250,000, representing an opportunity to enhance the value of the Portfolio.
  • Recent Leasing: Recent leasing at the Property has been strong, with leases being signed at $5.95-7.15 per square foot, which on a weight average basis, are significantly higher than the underwritten market rents of approximately $5.00 per square foot.
  • Leasing Upside With a Diversified Tenant Base: The Portfolio is 77% percent leased to 25 tenants with expirations spread over the next five years. Many tenants have histories of multiple one-year renewals that escalate each year, maintain the prior base year stop and are completed on a direct basis with ownership. Although they are not considered long-term tenants, these habitual renewal tenants provide stability and low cost renewals to the Portfolio.
  • Recurring Distributions to Investors and Upside Potential: The Property is being purchased at an 8.6% cap rate based on Year 1 NOI and the Property is expected to generate cash on cash returns ranging from 8-11% per annum, with an average of 9.6%. Distributions are expected to begin in February 2015 and continue on a quarterly basis thereafter. 
  • Low Market Vacancy: The 223 million square foot Indianapolis industrial market has been steadily improving since the recession, and as of 1Q2014, the city’s vacancy rate stands at 6.1%. The Property is located in the East Indianapolis submarket, which contains 43 million square feet of product, a vacancy rate slightly above the city average as a whole at 6.8%; however, when only mid-sized warehouse properties are reviewed, the vacancy rate falls to 5.3%.

Risks and Risk Mitigation*

  • Forward-Looking Statements: Investors should not rely on any forward-looking statements made regarding this opportunity, because such statements are inherently uncertain and involve risks. We use words such as “anticipated,” “projected”, “forecasted”, “estimated”, “prospective”, “believes,” “expects,” ”plans” “future” “intends,”, “should,” “can”, “could”, “might”,“potential,” “continue,” “may,” “will,” and similar expressions to identify these forward-looking statements.
  • Illiquid Investment - Transfer Restrictions & No Public Market: The transferability of membership interests in Realty Mogul 22, LLC are restricted both by the operating agreement for that entity and by U.S. federal and state securities laws. In general, investors will not be able to sell or transfer their interests. There is also no public market for the investment interests and none is expected to be available in the future. Persons should not invest if they require any of their investment to be liquid. This is particularly important for persons of retirement age, who should plan carefully to assure that their assets last throughout retirement.
  • Low Occupancy Compared to Submarket: Two (2) tenants recently vacated the Property which dropped the occupancy from 89% down to 77%. Since 2005, the Property has averaged 85% occupancy, with some years achieving in excess of 95% occupancy. Recent leasing at the Property has been strong, with leases being signed significantly higher than the projected market rents. In addition, the budget has a tenant improvement allowance of $2 per square foot, which should adequately address any tenant improvement costs. Additionally, the vacant space has recently been updated with new carpet, lights and paint. Lastly, this risk is mitigated by the fact that BIG is an experienced group of industrial specialists with a current portfolio of 12.8 million square feet, with a vacancy rate of 1.3%. 
  • Heavy Rollover: Due to a number of short term leases being in place, the Property’s rollover schedule is heavy, with 100% of the space rolling over the next five (5) years. The seller has been in contact with tenants whose leases are set to expire in 2014 and 2015, and 65% of the 138,200 square feet have indicated a high likelihood of renewing, with some of the tenants expressing a desire to expand their space. It is common in the market for small tenants to consistently sign leases with terms of one to three years, and to sign short term renewals year after year, rather than signing longer term leases. This is evidenced by the fact that the short term leases are mostly concentrated in the heavily multi-tenant building #6. Larger tenants are expected to sign leases with terms of five to seven years. The average tenant at the Property has been an occupant since 2009, and recent leasing momentum has been positive.
  • Debt With a Five Year Term: The loan on the Property is expected to have a term of five (5) years, potentially creating a refinancing risk should market conditions deteriorate over the next five years. As mentioned above, the Sponsor will be focused on signing/renewing leases at the Property, and the larger tenants' leases are expected to carry terms of five to seven years, assisting in mitigating the refinance risk. Lastly, this risk is further mitigated by the fact that the Sponsor is projecting a three (3) year hold period. 
  • Debt With Two Year Interest Only Period: There is a two year period after closing where the debt is interest only, and therefore the principal balance will not be amortized during this time. This risk is partially offset by the increase in estimated returns to investors during the life of the deal due to the lower debt service. 
  • Lease Up of Vacant Space: There is a risk that the leasing team will be unable to lease up the vacancy in the portfolio. This would have an impact on future cash flow and projected value for the Property. This risk is partially mitigated by an experienced leasing team - BIG intends to retain one of the major leasing firms in Indianapolis. Additionally, the Sponsor's current portfolio has an occupancy rate of 98.7%. 
  • Local Market Conditions May Impact Rental Rates: Local conditions may significantly affect occupancy, rental rates, and the operating performance of a property. Such risks include (but are not limited to): (i) plant closings, industry slowdowns and other facts that affect the local economy; (ii) an oversupply of, or a reduced demand for, similar properties; (iii) a decline in household formation or employment or lack of employment growth, (iv) laws that could inhibit the ability to raise rents or to sell a property; and (v) other economic conditions that might cause an increase in operating expenses, such as increases in property taxes, utilities, compensation of on-site personnel and routine maintenance.
  • Management Risk: Investors will be relying solely on the manager of Jackson Industrial LLC for the execution of its business plan. That manager in turn may rely on other key personnel with relevant experience and knowledge, including contractors and consultants. Members of Jackson Industrial LLC (including Realty Mogul 22, LLC) will agree to indemnify the manager in certain circumstances, which may result in a financial burden if any litigation results from the execution of the business plan. While the manager of Jackson Industrial LLC has significant operating experience, Jackson Industrial LLC is a newly formed company and has no operating history or record of performance. 
  • Rising Interest Rates: The Federal Reserve has announced plans over time to methodically reduce the amount of stimulus it will inject into the U.S. economy. This could potentially lead to rising interest rates and have an effect on the future value of the property. This risk is partially mitigated by the steadily increasing rental rates and income for the property that should be beneficial in offsetting the effects of future interest rate increases. The loan on the Property will have a interest rate that is locked at close, further mitigating this risk, and lastly, the Sponsor is projecting a hold period of three years. 
  • Uncertain Distributions: The manager of Jackson Industrial LLC cannot offer any assurances that there will be sufficient cash available to make distributions to its members (including Realty Mogul 22, LLC) from either net cash from operations or proceeds from the sale of the asset. That manager, in its discretion, may retain any portion of such funds for tenant improvements, tenant refurbishments and other lease-up costs or for working capital reserves.
  • General Economic and Market Risks: While BIG has conducted significant research to justify the intended rental rates and sales price relative to comparable properties in the market, its best efforts to forecast economic conditions cannot state for certain whether or not investor sentiment and the capital markets will be favorable to the property at the intended disposition date. The real estate market is affected by many factors, such as general economic conditions, the availability of financing, interest rates and other factors, including supply and demand for real estate investments, all of which are beyond the control of the manager of Jackson Industrial LLC​.

*The above is not intended to be a full discussion of all the risks of this investment. Please see the Risk Factors in the Investor Document Package for a discussion of additional risks.

Property Details

Addresses: 3316-3346 N. Pagosa Court
8402-8440 E. 33rd Street
8520-8630 E. 33rd Street
8710-8768 E. 33rd Street
Indianapolis, IN 46226
Submarket: East Indianapolis
Years Built: 1977 & 1979
Current Occupancy: 77%
Net Rentable Area: 260,400 square feet
Total Suites: 32 units
Parking: 392 spaces, 1.5 per 1,000 square feet of rentable area
Dock Doors: 58, 2.2 per 10,000 square feet of rentable area
Drive In Doors: 14
% Office: 16%

Property Highlights

  • Strategic Location: The Portfolio is strategically located near the intersection of Interstates 70 and 465 with two separate access points via either Post Road or Shadeland Avenue. Access to these interstates provides excellent connectivity to many major Midwest transportation routes, including I-65, I-70 and I-74, providing access to 75% of the US population within a one day drive.
  • Differentiated Product: Tenants that require smaller suite sizes with access to dock doors have few high-quality options within the Indianapolis market. The Portfolio provides an attractive solution to this segment of the market that would not otherwise be accommodated in larger facilities.
  • Product Diversification: The Portfolio provides diversity in finish levels and suite sizes, predominantly ranging from 1,600 square feet to 22,500 square feet. These suite sizes, with good opportunities for signage, are ideally suited to this market as the largest segment of tenant demand in Indianapolis is for suites under 25,000 square feet.
  • Institutional Ownership: The Portfolio has been institutionally owned by a professional operator and has been well maintained over the years, resulting in limited deferred maintenance and near-term capital requirements. The seller, First Industrial, has also implemented an initiative in the vacant spaces, installing new carpet, paint, lights etc. to make the spaces more marketable to prospective tenants. 
  • Attractive and Diverse Tenant Base: The tenancy in the portfolio represents a broad spectrum of industries, protecting the income stream from a downturn in any single industry. The Property is leased to 25 tenants consisting of middle market companies with a need or desire to be in this market. There is only one tenant who accounts for more than 10% of the Property’s net rentable area and income, and they have occupied the Property since 2010. The average tenant has occupied the Property since 2009.
Location

Jackson Industrial Park is located in the East Indianapolis submarket of Indianapolis. The buildings are situated at the Northeast intersection of I-465 (the outer “loop” on Indianapolis, which provides for excellent access to downtown and the surrounding suburbs) and I-70 (the east/west interstate that connects Indianapolis to Ohio to the east and Illinois and Missouri to the west which is ideal for regional distributors).

The market information below was provided by various Jones Lang LaSalle industrial market reports, including the 1Q2014 Indianapolis Industrial Statistics report. 

Indianapolis Industrial Overview

The Indianapolis metro area continues to experience tremendous success and recovery due to its favorable business climate, skilled and affordable labor force, and competitive pricing dynamics. The overall market has approximately 223.2 million square feet of stock with 107.8 million in bulk/distribution product. Demand continues to trend upward as positive net absorption reached over 2.2 million square feet for bulk/distribution in 2013 and over 4.0 million square feet for the overall market. Leasing activity is brisk with approximately 12.0 million square feet of leases signed in 2013 with vacancy tightening across a number of submarkets while overall vacancy has compressed to 6.1 percent. The surge in leasing activity has been led by occupiers throughout the consumer goods, technology, and logistics industries. Indianapolis is seeing a surge in speculative industrial development with more than 2.4 million square feet of new construction. The traditional strengths of the market such as central location and affordable raw land, as well as market dynamics such as minimal vacancy rates coupled with rising rents, have led to increased Indianapolis building activity.

Market Outlook

  • Central Indiana is forecast to continue to outperform the U.S and Midwest relative to absorption and vacancy.
  • Warehouse space is forecast to be in high demand.
  • The ongoing economic recovery should continue to fuel consumer demand for goods leading to related occupiers seeking space and/or purchasing local product for distribution facilities and manufacturing operations throughout the metro.
  • A number of leases between 250,000 and 750,000 square feet are in the pipeline and are expected to be signed in the first half of 2014.
  • While large leases grab headlines, the largest component of lease demand is in the spaces of less than 100,000 square feet, representing approximately 60 percent of the demand as measured by number of requirements.
  • As leasing velocity remains vibrant, the trend in asking rents for the overall market, and especially mid-sized warehouse product, is anticipated to steadily increase in most submarkets such as the East.

East Submarket Overview

The East submarket is home to approximately 42.9 million square feet of stock, of which approximately 25 percent or 10.5 million square feet, is categorized as Mid-Sized Warehouse space. Mid-Sized Warehouse space consists of warehouse buildings that are less than 100,000 square feet in size. As evidenced by the vacancy rate of just 5.3%, this space is in high demand in the East submarket, which is characterized by many small-to-mid sized tenants. The majority of the submarket consists of second and third generation facilities that provide the necessary space at more affordable rates than in newer facilities. These facilities, especially those similar to the Portfolio that provide dock doors for even small suite sizes, are difficult to find in larger, more modern spaces, and fill an important need in the market.

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