At a glance
- The structure functions as an aggregation vehicle, with capacity committed to buying sites, separating it from the industrial and office debt clearing elsewhere this year.
- The business plan is spelled out, if thinly: acquire well-located IOS properties and execute value-add work that enhances how the sites function for a broad range of occupiers, which is the appeal for a facility built to keep adding assets, since a tenancy base that wide should keep any single lease from carrying the underwriting.
- Geography leaves the one visible gap: the strategy names three regions but the seed portfolio covers only Denver in the Mountain West and Houston and Austin in Texas, with no Midwest property identified, which may simply mean that leg comes later.
A Brennan Investment Group and Barings joint venture has secured $150 million to finance the aggregation of industrial outdoor storage across the Mountain West, Texas and the Midwest, with JLL Capital Markets arranging the facility, IREI reported Oct. 1. Five properties in the Denver, Houston and Austin markets seed the collateral, and the facility can add qualifying IOS assets during its initial term while also funding future tenant improvements, leasing costs and capital expenditures, with the stated aim of building a scalable IOS platform in what the source calls targeted growth markets.
The structure functions as an aggregation vehicle, with capacity committed to buying sites, separating it from the industrial and office debt clearing elsewhere this year. Barings sat on the other side of one of those trades, writing the $72.6 million loan on a Needham office campus that this publication read as lenders re-entering office behind equity, while CIBC's nonrecourse refinancing for SkyREM was priced off a full rent roll rather than a pipeline. Here the pipeline is the asset. The coverage does not name the lender, the pricing, the term beyond a reference to an initial period, or the leverage; financing an aggregation strategy is a bet on a manager's ability to source and lease, which is a different exercise from underwriting income already in place.
The business plan is spelled out, if thinly: acquire well-located IOS properties and execute value-add work that enhances how the sites function for a broad range of occupiers, which is the appeal for a facility built to keep adding assets, since a tenancy base that wide should keep any single lease from carrying the underwriting. What the coverage does not supply is basis. A $150 million facility is capacity, not a price, and with no per-asset or per-square-foot figure attached, the deal says more about the JV's appetite to consolidate the format than about what IOS sites clear for in Denver or Houston.
A $150 million facility is capacity, not a price.
Geography leaves the one visible gap: the strategy names three regions but the seed portfolio covers only Denver in the Mountain West and Houston and Austin in Texas, with no Midwest property identified, which may simply mean that leg comes later. Brennan has been moving in the meantime, logging four deal entries in this publication's records between Aug. 27 and Sept. 11, so the measure to watch is how many qualifying assets get added during the initial term and whether the next ones land outside the three metros that seeded the facility.
Reported by the Real estate debt desk from IREI. Published . Corrections