PGIM Real Estate Acquires $425M Industrial Portfolio

The investment manager purchased the 4.7 million-square-foot collection of properties in one of the largest U.S. portfolio transactions since the onset of the pandemic.

10209 W. Roosevelt St., Avondale, Ariz. Image courtesy of PGIM Real Estate

PGIM Real Estate has enhanced its industrial holdings by 4.7 million square feet in one fell swoop with the purchase of an eight-property national portfolio. The global asset manager acquired the group of 15 buildings from funds managed by Crow Holdings Capital for $425 million, marking one of the largest U.S. industrial portfolio trades amid the COVID-19 pandemic.

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Spanning Atlanta, Dallas, Denver, Fort Worth, Texas, and Phoenix, the eight assets sit within premier distribution markets offering access to critical infrastructure and proximity to densely populated, high-growth locations near gateway airports. The portfolio consists of under-construction and newly delivered properties, including the approximately 409,000-square-foot distribution center at 10209 W. Roosevelt St. in 101 Logistics Park just outside Phoenix in Avondale, Ariz. Crow Holdings developed the two-building 101 Logistics Park in partnership with Seefried Industrial Properties.

Crow Holdings constructed all 15 facilities with the functionality required for rising e-commerce and last-mile distribution demands; advanced distribution operations and autonomous machinery; as well as next-generation uses. The partially completed state-of-the-art portfolio has already proven popular among tenants in the market for space. Robust leasing activity continued during the sale process, ultimately leaving four of the delivered buildings fully leased. The tenant roster currently includes a number of national retail chains and corporations.

Down but hardly out

While U.S. industrial real estate has seen its sales volume go on the downswing during the pandemic, the sector remains an investor favorite. “The sector’s decline was the smallest of any major property type. And, of the $11.1 billion in industrial transaction volume, around one-third came from sales of distribution warehouses,” according to a mid-year report by Real Capital Analytics. “Distribution warehouses continued to be a target for investors in the second quarter of 2020 amid heightened attention on the backbone of logistics infrastructure.” Notable transactions included the 1.5 million-square-foot, Amazon-occupied Kenosha Enterprise Park in Kenosha, Wis., which traded for $176 million, and Amazon’s 855,000-square-foot Distribution Center in North Las Vegas, which sold for $110 million.

Investment activity in the third quarter appears to be just as active—if not more active—as it was in the second quarter. In August, a joint venture of Wharton Industrial and a Walton Street Capital-affiliated investment fund acquired a 1.2 million-square-foot New Jersey portfolio from the Bloom Organization. In July, The Koll Co. and PCCP LLC partnered on the purchase of a half-million-square-foot portfolio, acquiring the two Sacramento and Salt Lake City properties from a private family trust for $41.3 million. Additionally, Invesco sold a 1.8 million-square-foot portfolio of warehouse and distribution properties in metropolitan Boston and Chicago in two separate transactions totaling $200 million. With the closing of the Crow Holdings transaction, PGIM Real Estate’s third quarter acquisitions for its core fund now total 49 premier industrial properties encompassing an aggregate 12.3 million square feet in key U.S. distribution markets.

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