Bascom Group has partnered with Capital Trust Group to acquire a Class A, 372,856 sq ft, absolute net-lease, build-to-suit research and development, manufacturing and testing facility and an adjacent 118,620 sq ft corporate office in the Milwaukee-area community of Menomonee Falls, Wisconsin for USD100.0 million.
JLL worked on behalf of Bascom Group to arrange the joint venture partnership with The Capital Trust Group. Additionally, working on behalf of the new partnership, JLL placed a 10-year, 65-percent, LTV, CMBS, fixed-rate USD63.7 million loan with Citigroup. This transaction marks Capital Trust Group’s first acquisition in the United States for over two decades.
The mission-critical facility was delivered in July 2020 as a build-to-suit for Leonardo DRS’ naval division, which already occupied the adjacent three-story office building beginning in 2019. The facility is used to design, test, and produce naval and marine products for the US Navy. The asset provides exceptional income stability. The tenant has been based in Milwaukee since 1899 and has entered a 20-year absolute net lease with annual rent escalations.
Parent entity Leonardo SpA (Credit: Ba1/BB+) is the 12th largest company in Italy and a worldwide leader in aerospace, defence and security. It has more than 80 percent of its revenues coming from military or government contracts and over 49,000 employees across five divisions with products and solutions used in over 150 countries. Leonardo DRS is the largest among all 11 Leonardo subsidiaries. Since 1969, it has been the mission-critical supplier to the US Government’s Department of Defense (DOD).
“We are delighted to be re-entering the US real estate market after a prolonged period of focusing on Europe and the UK,” says Raney Aburdene, head of Investor Relations and Business Development with Capital Trust. “The asset we have secured provides attractive risk adjusted returns for our investors in a challenging market. This was enhanced by JLL being able to source very competitive debt terms, and we are very satisfied with the work of Christopher Knight and Claudio Sgobba throughout this process. We are also very excited about the opportunity to work with an established name in the U.S. market such as Bascom, who have an exceptional track record, and are looking forward to growing our portfolio through our partnership.”
“We are excited about our new partnership with Capital Trust to acquire credit-tenant, triple-net-leased properties in the United States,” adds Jerry Fink, managing partner of Bascom. “Our local knowledge, acquisition, due diligence and operational experience coupled with Capital Trust’s capital sourcing makes for an attractive partnership,” David Kim, managing partner of Bascom said. Paul Diamond, Senior Principal-Operations, further added, “In addition, given all three of the principals of Bascom met in the real estate program at the University of Wisconsin, the acquisition is very meaningful for us given the proximity to the campus.”
Bascom has also partnered with Southern California based Real Estate Development Associates (REDA) on several other logistics/warehouse development deals in Southern California. Together, the REDA/Bascom partnership has entitled over 6.5 million square feet of logistics / warehouse facilities in the past 48 months. In March of 2020, the partnership delivered a 1.1 million square foot building to Kimberly Clark Corp. and signed a lease for a BTS with Uline, totalling 1.245 million square feet which is currently under construction at the Ontario Ranch Logistics Center in Ontario, California. In March 2021 the partnership will break ground on the development of the Ontario Ranch Business Park, also in Ontario, California. The two-phase project will total over three million square feet in 12 buildings. Phase I, totalling 1.7 million square feet is anchored by a state-of-the-art 1.1 million square feet logistics facility and will be built on a speculative basis with completion in Q3, 2022. The partnership also has another 200 acres of land which is slated for development in 2022.
In addition to REDA, Bascom has also partnered with Shubin Nadal Realty Investors. The value add and development focused venture has completed eight projects totalling over two million square feet and USD1.3 billion in market value over their nine-year relationship.
The JLL Capital Markets team that advised the joint venture equity partnership and arranged financing was led by Managing Director Claudio V. Sgobba in JLL’s London office and Senior Director Christopher Knight in JLL’s Chicago office.
“This long-term, single-tenant net lease is exactly what Middle East based investors are seeking: A United States-based, safe, yield-generating income stream held for diversification and capital appreciation purposes,” Sgobba said. “It is our pleasure to serve our long-standing London-based client, Capital Trust. We are extremely excited about Capital Trust’s US commercial real estate ambitions and their strategic programmatic joint venture with the Bascom Group.”
“The long-term stability of credit-worthy, net-lease facilities is incredibly attractive to financing institutions, particularly in a market with perceived uncertainty in other asset types,” Knight adds. “Given that there was significant interest from both US and Middle Eastern-based lenders that provided a range of highly accretive options to the venture.”
Source: Private Equity Wire
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