casestudies

Case Study #1

325 S. Salem Church Road
York, PA
Bulk Industrial: 785,400 SF

 Optimized Endurance 04 24 16 Pic12

Deal Timeline: March 2014 to March 2016
Equity Invested: $13,275,000
Property Level IRR: 58.77%
Multiple on Equity: 2.58

In early 2014 Endurance (“EREG”) acquired 325 Salem Church Road in York, PA, a 624,800 SF Class A warehouse/distribution property for $26,500,000. This was an off-market transaction structured as a short-term sale/leaseback transaction with the seller American Signature Furniture. Located in the Central PA region of the I-81/I-78 distribution corridor in Pennsylvania, one of the premier bulk distribution markets in the country, this 2007/2015 vintage Property features modern distribution building specifications including 54’ x 43’ column spacing, two 60’ staging bays, a 375’ deep truck court/ parking field, and most notably a 40’ clear height capable of accommodating four (4) levels of pick modules. The property had become excess corporate real estate and the business plan was to expose this asset to the marketplace for the first time.

During the term of the leaseback with American Signature Furniture, EREG sourced a buyer for the racking left behind by American Signature Furniture (resulting in a $1.4MM profit) and upgraded the sprinkler system in the 2007-vintage section of the Property to an ESFR-type system. Shortly after the completion of this work and with no downtime and at rents exceeding underwriting EREG secured Target Corporation for a long-term lease for the entire property to serve as their Northeast e-commerce Distribution Center. As part of the Target lease the excess land on the parcel (which was not valued at acquisition) was required for Target’s occupancy needs. EREG procured approvals for and delivered a 160,600 SF expansion (under budget and with tax abatement incentives in place) matching the specifications of the existing building including best-in-class 40’ clear height. A crucial aspect to securing Target’s tenancy was meeting their overall timing needs to be ready for operations for the 2015 holiday season. In addition, EREG worked with Target to ensure the smooth installation of $40MM worth of material handling equipment including build-out of four (4) level pick module system.

After a two year hold Endurance sold the expanded, 785,400 SF property for $60,000,000 or $76.39 PSF to an undisclosed institutional buyer through a full marketing process. The sale resulted in a property-level IRR of 58.77% and an equity multiple of 2.58.


 

Case Study #2

515 Zarfoss Drive
York, PA
Bulk Industrial: 312,769 SF

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Deal Timeline: December 2011 to November 2015
Equity Invested: $3,825,000
Property Level IRR: 30.1%
Multiple on Equity: 2.89

In late 2011 Endurance (“EREG”) in an off-market a acquisition acquired 515 Zarfoss Drive in York, PA, a bulk warehouse/distribution building totaling 312,769 square feet for $8,075,000 or $25.80 PSF. Built in 1985, and expanded in 1988, the Property featured all the amenities required by contemporary distribution needs including ceiling heights up to 31’ clear, 29 loading doors, a wet sprinkler system, and approximately 7,400 SF of office space. The Property benefits from excellent access as well as easy linkage to the tri-city area of Harrisburg, Carlisle and York with the region’s most important highway systems including I-83, I-81, I-78, I-76 (Pennsylvania Turnpike), Route 222 and Route 30.  The Property is located within a day’s drive for more than 100 million people and six of the eight largest US markets, as well as 50% of Canadian consumers within an 8-hour truck commute.

At acquisition the Property was fully occupied by Syncreon.US, Inc. (providing logistical support and light assembly services to Harley Davidson) on a short-term lease at a below market rent signed during the trough of the market. Syncreon ended up needing to expand and relocate for closer proximity to Harley. Synreon’s departure provided an opportunity to implement a planned base building renovation and obtain a new user at inflated market rents. Building updates included exterior painting, electrical, dock, and slab repairs, extensions of the truck court dolly pads to accommodate 53’ trailers, and a full roof coating. As a result of the base building program, enhanced curb-appeal, and a broadly targeted leasing effort EREG successfully released the entire property to The Wolf Organization, LLC, a supplier of kitchen cabinets and building products, for use as a distribution facility.

 Through a full marketing effort, EREG closed on the sale of the property in November 2015 to an institutional investor group for $16,500,000 ($52.75 PSF), realizing a 30.1% property-level IRR and a 2.89 equity multiple.


 

Case Study #3

Drew Court
420 and 440-488 Drew Court
King of Prussia, PA
Flex Industrial: 146,906 SF

drew court 1 drew Court 2

Deal Timeline: December 2011 to June 2015
Equity Invested: $3,750,000
Property Level IRR: 21.58%
Multiple on Equity: 1.83

420 and 440-488 Drew Court were purchased by an affiliate of Endurance in partnership with Thackeray Partners of Dallas Texas. Located in King of Prussia, PA, these two Class A warehouse/flex buildings were developed in 1975, and have 24 loading doors, a wet sprinkler system, and approximately 30,000 SF of office space (20%). The strong physical aspects of the property, along with the fantastic location near the Pennsylvania Turnpike and I-95 Corridor, allowed the EREG/Thackeray partnership to successfully expand a major tenant, Pinnacle Textile Industries, after implementing a base-building renovation program. The successful investment yielded a property-level IRR of 21.58% and a multiple of 1.83x to its investors. 


  

Case Study #4

2834 Schoeneck Rd.
Lower Macungie, PA (Lehigh Valley)
Industrial: 270,000 SF and fully-entitled developable acreage

2834 Schoeneck nice picture

Deal Timeline: March 2011 to June 2013
Equity Invested: $5,600,000
Property Level IRR: 39.90%
Multiple on Equity: 2.01

In March of 2011, Endurance Real Estate Group acquired 2834 Schoeneck Rd. for $11,100,000 or $41.11 PSF on an off-market basis. This highly functional, 270,000 SF warehouse/distribution building was constructed in 1997 and features all the modern amenities of a new distribution building including 32’ ceiling heights, 31 loading doors (crossdock capability), an ESFR sprinkler system, abundant trailer and car parking, and 20,000 SF of office space. The Property also includes nine acres of developable land which allows for an expansion of the existing building of up to 100,000 SF or a stand-alone building of up to 80,000 SF. At the time of the acquisition, the building was 100% leased to The Lehigh Group, a division of the Jarden Corporation. During its holding period, Endurance as the operating partner successfully renewed the Lehigh Group in place for an additional five years. In addition, Endurance took the excess land through the development approval process. Through a full marketing effort, Endurance closed on the sale of the property in June of 2013 to private REIT for $16,550,000 ($61.30 PSF), realizing a 39.90% property-level IRR and a 2.01 equity multiple.


 

Case Study #5

9747 Commerce Circle
Kutztown, PA
Industrial: 384,695 SF

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Deal Timeline: August 2010 to December 2012
Equity Invested: $7,200,000
Property Level IRR: 29.21%
Multiple on Equity: 1.77

In August of 2010, Endurance Real Estate Group acquired 9747 Commerce Circle for $15,900,000 or $41.33 PSF on an off-market basis. The 384,695 SF warehouse/distribution building, located in Kutztown, Pennsylvania in the core of the Lehigh Valley industrial market, was fully-leased at the time of sale. This highly functional building was constructed in 2007 and features all of the modern amenities of a new distribution building including 32’ ceiling heights, up to 40 loading doors, and an ESFR sprinkler system.

At the time of the acquisition, the building was 55% leased to TEVA, the global pharmaceutical company with certain base-building improvements remaining to be completed. During its holding period, Endurance successfully stabilized the property through the signing of a 140,000 SF lease in April of 2012 with Hearth and Home Technologies, the world's leading producer and installer of hearth products. As part of the lease transaction, Endurance made several improvements to the building including the construction of 5,000 SF of office space and the addition of ten new loading doors. Through a full marketing effort, Endurance closed on the sale of the property in December 2012 to an institutional investor group for $21,300,000 ($55.37 PSF), (subject to existing financing equal to approximately 45% of the purchase price at an above market interest rate) realizing a 29.21% property-level IRR and a 1.77 equity multiple.  


 

Case Study #6

Premium Business Center 
Reading, PA
Industrial: 394,000 SF and a 6.5 acre land parcel
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Deal Timeline: June 2006 to May 2012
Equity Invested: $3,800,000
Property Level IRR: 14.35%
Multiple on Equity: 2.21


In June of 2006, Endurance Real Estate Group and Brasler Partners acquired Premium Business Center for $12,200,000. The property, a fully-leased, 394,000 SF building (at the time of sale) located at 171-173 Tuckerton Rd. in Reading, Pennsylvania, is a highly functional facility containing quality warehouse, distribution and production space. There is also a 6.5 acre parcel located along the southern property line which will accommodate +/- 85,000 square feet of expansion or a freestanding building. 

After losing its largest tenant, the Power Packaging Division of Exel in late 2009, Endurance/Brasler successfully stabilized the property by signing a 15-year lease commencing in early 2011 with Packaging Corporation of America (PCA) for 220,000 square feet. As part of its strategic customization of the PCA space, Endurance/Brasler managed the construction of a new enclosed, climate controlled, six railcar dock and extension of the rail line to the complex. In addition, PCA chose the Endurance/Brasler team to deliver the significant new infrastructure required for their production operation, including corporate offices, process buildings, and associated manufacturing improvements. The remaining 172,000 square feet is occupied by Termaco USA and FiberMark.

During its holding period, Endurance/Brasler significantly enhanced the value of the asset and successfully positioned it for sale. In May of 2012 the Endurance/Brasler team closed the sale of the property to a publicly traded REIT through a full marketing effort for $17,050,000, or $43 per square foot, realizing a 14.35% IRR for its investors and a 2.21 multiple on their equity. 


 

Case Study #7

Penn Warner Industrial Portfolio
Fairless Hill, PA
Industrial: 4 buildings, 240,000 SF
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Deal Timeline: April 2003 to April 2007
Equity Invested: $3,375,000
Property Level IRR: 32.2%
Multiple on Equity: 2.52

In April 2003, Endurance acquired the Penn Warner Industrial Portfolio, consisting of four single-story industrial buildings in Fairless Hills, Pennsylvania, located in the Bucks County industrial market. The properties were purchased for $9,000,000.

Built between 1968 and 1970, the four buildings total 240,000 rentable square feet. At the time of purchase, the properties were 100% occupied with approximately 42% of the rent roll turning over in the first two years of our ownership. Endurance successfully stabilized the property by signing a six year lease with Hydrofarm for 30,000 square feet, renewing/expanding Smart Management from their original 60,000 square feet into an additional 60,000 square feet for five years, and renewing Heritage in 20,000 square feet for three years. Deferred maintenance issues throughout the property were addressed by our property management team in a timely and efficient manner substantially increasing the overall curb appeal of the asset. These improvement efforts resulted in the aforementioned new lease with Hydrofarm referenced above and the renewal/expansion of Smart Management.

In April 2007, Endurance sold the Penn Warner Portfolio through a full marketing effort for a sales price of $12,400,000, realizing a 32.2% IRR and a 2.52 multiple.


 

Case Study #8

Colwick Business Center - (Initial Ownership Period)
Cherry Hill, NJ
Office: 3 buildings, 169,438 SF
Colwick2

Deal Timeline: December 2004 to July 2006
Equity Invested: $4,150,000
Property Level IRR: 78%
Multiple on Equity: 2.41

In December 2004, Endurance acquired the Colwick Business Center, three Class A, single-story office buildings in Cherry Hill, New Jersey, a sub-market of the Philadelphia MSA. The properties were purchased in an off-market deal for $15,300,000.

Built in 1987, the three buildings totaled 169,438 rentable square feet. At the time of purchase, the property was 86% occupied with approximately 50% of the rent roll turning over in the first year of our ownership. Endurance successfully stabilized the property by renewing the two largest tenants, ACE Insurance in 51,459 SF and the Internal Revenue Service in 24,179 SF, to five and three year leases respectively.

Additional activity included the execution of a new lease with a day care center operator for the complex. Deferred maintenance issues throughout the property led to our investment in capital improvements to the parking lots and roofs by our property management team in a timely and efficient manner. These improvements substantially increased the overall curb appeal of the asset and contributed directly to the successful renewal of the two anchor tenants referenced above.

In June 2006, Endurance sold the Colwick Business center through a full marketing effort for a sales price of $22,350,000, realizing a 78% IRR and 2.41 multiple.