written by
Rocco Cortese

Intersection Investment Management Acquires Industrial / Flex property in Gilbert, Arizona

Intersection Investment Management is pleased to announce it has acquired a 92,750 square foot multi-tenant flex industrial property in Gilbert, Arizona. Representing brokers, David Bean and Cory Sposi of Commercial Properties Inc., completed this off-market deal bringing the second acquisition in Intersection’s post-pandemic industrial investment strategy. The strategy focuses on $5-$20M projects in markets west of Denver based on post-covid market trend forecasting. The investment was syndicated to a group of Intersection’s high net worth investors. It is the company’s 8th acquisition in total and the fund now has surpassed over $100M in historical deal transaction volume. Anton Myskiw, Intersection Senior Analyst and Phoenix native who sourced the deal says,

“Given the competitive nature of the market for this kind of product, we have to recognize the great work done by our brokerage team at Commercial Properties. They have worked collaboratively with us for months in the Phoenix Metro area and helped us find a great deal off market.”

The Sellers, Golden Key Industrial Park LLC. who previously held and managed the property as private investors, focused upon occupancy rather than driving rental rates. This resulted in an opportunity to hold rents at market while completing significant improvements at the property. This will allow Intersection to focus on tenant experience and make improvements that will improve curb appeal and value-add. Planned renovations include new paint, parking lot resurfacing, landscape upgrades, and, new tenant signage to provide greater visibility. Rocco Cortese, Managing Director with Intersection confirms,

“Multi-tenant flex with a value-add component represents a very good risk profile for our investors. The Southeast Phoenix market has great fundamentals and we can see a clear path to demand for high quality product like KeyWest Plaza. Fundamentally, that is what we set out to do on every deal”

Intersection envisions and intends to create a best-in-class flex industrial asset to meet the demands of the accelerated growth in the Gilbert market. Commercial Properties LLC. will continue to manage and lease the property on behalf of Intersection. David Bean, who represented the seller as broker for Commercial Properties, Inc. notes,

“Intersection is relatively new to this market, but quickly understood where the growth opportunities could be found. We look forward to working with them as they execute the strategy on this property.”

To learn more about this deal please reach out to Rocco Cortese at rcortese@intersectioncre.com or Anton Myskiw at amyskiw@intersectioncre.com

Autumn Valencia is the Marketing Coordinator at Intersection, providing strategic marketing expertise to support business objectives across company divisions. For general and marketing inquiries, please contact Autumn at avalencia@intersectioncre.com 

written by
Kyle Clark

Prominent four-building retail center has been sold in an off-market deal

Senior Director Kyle Clark represented the seller of a prominent retail center in the Sports Arena district in San Diego, the Four-Building property located at 3146-3194 Midway Drive, San Diego CA, 92110 closed earlier the last week of April.

At the time of sale, the property was 95% leased to an array of both local and national tenants, including Taco Bell, Epic Wings, Kyoto Sushi, and Tandoori House. Additionally, National credit tenant Popeye’s Chicken will be opening in the center this Summer operating out of the corner unit that

The purchase was structured to accommodate the amicable dissolution of a business partnership between the two sellers’ families.

“This was an opportunity for our clients to sell the property to settle a jointly owned and operated business they ran for decades but have recently sold in Central California.” -Kyle Clark

The off-market deal was transacted through the outreach of interest through the purchasers. The buyers look forward to continuing operating the property as it has been while anticipating the eventual redevelopment of the Sports Arena site, the former post office headquarters, and the surrounding area which is believed to bring new life to the area.

 

To learn more about this deal please reach out to Kyle Clark at kclark@intersectioncre.com

Autumn Valencia is the Marketing Coordinator at Intersection, providing strategic marketing expertise to support business objectives across company divisions. For general and marketing inquiries, please contact Autumn at avalencia@intersectioncre.com 

written by
Rocco Cortese

Intersection is pleased to announce the sale of a fully leased and stabilized internal investment fund property managed by Intersection

Experiential Poway Retail Center Closes for $13.5 M

Senior Directors, Kyle Clark, and Dan McCarthy along with Senior Associate Alec Spencer, represented the seller in the sale of the North County retail center, Old Poway Village at 14005-14055 Midland Road, Poway CA. The 35,191 square-foot award-winning center consists of a selection of carefully curated retail tenants.

The property was sold as a fully leased and stabilized investment. After acquiring the property in 2017, Intersection established a new vision for the center that focused on building a destination lifestyle center for the Poway Community. To accomplish this, Intersection replaced several non-performing tenants with new, carefully curated businesses to create a retail experience conducive to the family neighborhood of Poway and surrounding North County residents.

Artisan Food and Beverage tenants The Hop Stop, Smokin’ J’s, and Mission Cellars anchor the center, and they are complemented with users such as the Bark and Collar, Poway Music Academy, Poway Pilates, and a lineup of other local tenants that support a unique dining and shopping experience.

“This has been a true passion play for Intersection.” Said Mark Hoekstra, Managing Director of Intersection. “I grew up in this neighborhood and always felt that this center could become something special. It has been an amazing journey seeing this property transform”.

The property was sold to a 1031 Exchange Buyer who closed within 45 days of opening escrow. “We positioned this asset to sell with clean triple net leases, good lease term on the rent roll, and have maintained the property impeccably.”, shared broker Kyle Clark “The Escrow was smooth with no surprises.”

The buyer plans to hold the asset long-term drawing upon the stabilized cash flow. “This property performed very well during the pandemic.” Stated broker Dan McCarthy. “Our tenant base was resilient, and the many outdoor areas benefited our food and beverage tenants significantly.”

To learn more about this deal please reach out to Kyle Clark at kclark@intersectioncre.com or Dan McCarthy at dmccarthy@intersectioncre.com

Autumn Valencia is the Marketing Coordinator at Intersection, providing strategic marketing expertise to support business objectives across company divisions. For general and marketing inquiries, please contact Autumn at avalencia@intersectioncre.com 

written by
Anton Myskiw

Intersection Makes First Nevada Acquisition Adding to a Diverse Portfolio of Value-Add Properties in Attractive Growth Markets

LAS VEGAS, Nevada. – Intersection officially announced the close of escrow on a 100% occupied 18-unit flex industrial property in Las Vegas, Nevada for $4,525,000. This property is the seventh acquisition made by the company crossing $70M of total capitalization.

The property, located at 4355 -4375 W. Reno Ave., Las Vegas, NV 92105 is a two-building project in West Las Vegas and was purchased in an off-market transaction from a local ownership group. The deal was sourced off-market through a local broker Erik Sexton of NAI Excel Las Vegas.

“This was a property that needed institutional quality management and an entrepreneurial strategy. Intersection recognized the value and moved quickly.”

Said Sexton. Intersection Senior Analyst Anton Myskiw added, “We have been working diligently to find industrial/flex assets in this market. We’ve already completed 3 new leases and will execute a value-add plan that improves operations as well as the curb appeal of the property.”

The asset is currently 100% leased by a wide cast of both local and regional tenants, with 72% of the building’s occupancy rolling in the next 12 months. Las Vegas is an attractive industrial growth market, given its positioning as a centrally located logistics hub for the Western region of the states. With 8.5M SF of industrial space under construction in the second quarter of 2021- Intersection is confident this property is a prime candidate to attract auxiliary/complementary users servicing the larger projects-general contractors, material vendors, and other development-focused tenants.

To learn more about this transaction or to inquire about how to invest in a portfolio property please contact Senior Analyst Anton Myskiw at amyskiw@intesectioncre.com

Autumn Valencia is the Marketing Coordinator at Intersection, providing strategic marketing expertise to support business objectives across company divisions. For general and marketing inquiries, please contact Autumn at avalencia@intersectioncre.com 

written by
Rocco Cortese

A Detailed look into general partner investing and navigating a deal through a pandemic

Throughout my years raising capital for our real estate investments, I have encountered a few investors who ask how they can be the General Partner instead of the Limited Partner in a deal. The first thing that would come to mind when I heard those questions is: Invest thousands of hours in learning a complex industry, and hundreds of thousands of dollars into people and technology, and you will be just getting started. Putting together a successful commercial real estate deal is not for the faint at heart or the inexperienced. It takes years of hard-work, talented people and you have to actually find the right deal in a very competitive market. That said, Ingenuity, Collaboration, and Stewardship are core values of our firm so we always tried to find a way to give our investors a taste of the General Partner “like” returns by targeting value add properties with higher return scenarios.

 

During the Pandemic, we were raising our second Fund and in March of this year (2020) we purchased an office property. Bad timing? Not really. We still love the deal and our basis, and in fact, feel very bullish about the long-term opportunity to generate a strong return for our investors. The structure in that deal, however, was a little different. We had a joint venture partner in that property, and our Fund was acting as the General Partner. All of the returns from the Joint Venture, including carried interests that we would be able to earn in excess of the property level returns, were set up to inure to the Fund. This structure effectively put all of the Fund investors in the role of General Partner. Normally, this scenario is structured a little differently with investors only earning a percentage of the carried interest. However, because we were using Fund equity as the General Partner capital, we felt that sending 100% of the carried interest to investors was the right thing to do. Considering the risk that the Pandemic has thrown into the market, we’re happy to have that structure in place and are optimistic that the returns will ultimately play out in a significantly positive way for our Fund.

As we approached the structure of our last deal, we started to consider the concept in a more meaningful way for future deals. Our research returned that the GP Co-Investment structure seemed very appealing for us as we continued to build our investment practice. We had just built out a new strategy for acquiring logistics based industrial in markets west of Denver and realized that we could lever our personal capital more effectively if we brought in GP-Co Investors in multiple deals. They would have the opportunity to earn a 10% piece of our carried interest effectively allowing the individual investor to earn greater returns than our institutional limited partners when measured against project-level returns.

Sometimes unexpected situations create opportunity. Not only did we develop a new and exciting investment strategy, but we were also able to create an investment structure that helped us address the requests of those who wanted to be General Partner in some of our deals. The thousands of hours, and hundreds of thousands of dollars invested in people and technology, along with a little entrepreneurship, helped us put our private investors one step ahead. We’ll still do all of the heavy lifting of course and continue to focus on enriching the lives of those we serve (whether they be GP’s or LP’s)!

Autumn Valencia is the Marketing Coordinator at Intersection, providing strategic marketing expertise to support business objectives across company divisions. For general and marketing inquiries, please contact Autumn at avalencia@intersectioncre.com 

written by
Dan Leon & Anton Myskiw

Research shows a significant pipeline of industrial demand, can we THINK™ like supply chain managers to predict where it will go?

 

Our team hopes everybody is staying safe and healthy during these unprecedented times. 5 months ago, California and our office went into a state of lockdown. Businesses temporarily shut their doors, some fully closing in consequence. The state of the economy and real estate sector shifted overnight. The industry collectively held their breath in anticipation of what was to come.

Friday, March 18th, we were both new to the functionality of working-from-home. We sat on a Zoom call that morning discussing the market implications, whether it was derived from Peter Linneman’s Webinar or general market sentiment. The bottom-line from our discussion was that our firm needed to take a proactive approach to recent events and that a refresh in our investment strategy was necessary. Through significant macro & microeconomic research over the course of the next two weeks, we arrived at a high-level strategic concept of pursuing logistics-based industrial assets. Once we had a foundation, we needed to piece together support around this idea.

Two primary drivers reinforced our reflections: the rebirth of domestic production (offshoring to onshoring manufacturing) and the surge of e-commerce.

Over the past 2 years, retail e-commerce sales, as a percentage of total retail sales, have increased by 500 bps. The volume of those purchasing staple and discretionary items at the touch of a button has only increased from the onset of the virus, with many market experts believing in an irreversible shift from traditional brick-and-mortar sale. The previous, intertwined with the growing argument for domestic manufacturing, invokes the need for logistics-based assets in the near future. The fact that the opportunity cost margin of offshoring production of final goods is shrinking, due to on-going trade discussions/uncertainty & increasing labor costs overseas, supports the prior. Our vision encapsulates these market shifts, in our pursuit of suburban distribution centers (best utilized for same-day delivery), city-center distribution centers (1-2-day delivery), and manufacturing facilities.

As a result of this accelerated e-commerce adoption, the increased inventory levels required by retailers could generate square footage demand for logistics-based industrial equivalent to the total supply of industrial assets in the Inland Empire. Now that we have our rationale behind the investment, where does the demand go, and how do we intend to capture it? That’s where the proprietary THINK™  process came into play. Our team developed a quantitative site selection formula that incorporates the use of multivariable regression analysis to find markets that are best positioned to serve future logistics operations.

In effect, we had to understand what drives the logistics industry, where supply chains would thrive, and ultimately, we had to THINK™ like a supply chain manager.

If you have any interest in learning more about the acquisition & financial criterion within our 3rd offering, please reach out to the experts at Intersection.

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