Property Details
Below Market Rents  Below Market Occupancy  NOI Growth 
Asset Profile
Value Add

Minnesota Last Mile Industrial Portfolio

St. Paul & Minneapolis, MN

Industrial Property

This deal is oversubscribed

Join Wait-List
Midloch Investment Partners Minneapolis, MN
Midloch Investment Partners
  • IRR 15.7%-18.1%
  • Equity Multiple 1.51x-1.60x
  • Hold Period 3Y
  • Minimum Investment $25K
  • Year 1 Cash on Cash 5.57%-6.57%
  • Stabilized Cash on Cash 9.57%-10.57% Y2
  • First Distribution May 2022
  • Distribution Frequency Monthly
  • Co-Investment 45% ($5.8M)
  • Preferred Return 9.25%
  • Investor Profit Share See Financials
  • Asset Profile Value Add
  • Loan-to-Value 68.4%
  • Current Occupancy 76.4%

About this Property

"A last-mile industrial portfolio comprised of 532,005 square feet of Class B warehouse space located in two desirable first ring submarkets of the Minneapolis/St. Paul MSAs."

-Andy Sinclair, Midloch Investment Partners

Square Footage 532,005 sq. ft.
Current Occupancy 76.4%
Purchase Price $34,600,000
Price/Sq. Ft. $65.04/Sq. Ft.
Loan to Value 68.4%(1)
Stabilized Loan to Value 61.4%
(1) The industrial portfolio will be financed with a $23,650,000 loan at a 68.4% loan-to-value (purchase price) at closing. The interest rate is fixed at 3.65%. The loan provides a line of credit / loan advance that can be used for building improvements, tenant improvements, or other general needs.
Property Addresses

Fairview

655 Fairview Ave N
St. Paul MN 55104

Penn

9231 Penn Ave S
Minneapolis, MN 55431

Year Built 1952 1967
Year Renovated 2021 1998
Square Footage 313,106 sq. ft. 218,899 sq. ft.
Current Average Rents $5.29/SF $4.29/SF
Average Market Rents $5.75+/SF(2) $5.00+/SF(2)
(2) These represent underwriting for market rent, however some Class B lease rates are higher in the surrounding areas.

Top Questions

All answers are provided by the sponsor, Midloch Investment Partners, or its representatives.

Why do you like these properties?

Andy Sinclair, Midloch Investment Partners:

  • Strong Locations: These properties are well-located Class B last-mile industrial properties in first ring submarkets. These properties have easy access to I-94, I-35, I-494, and the Minneapolis-St.Paul Airport.”
  • Limited Leasing Needed: This Last Mile Industrial portfolio is a value-add light deal. The occupancy is about ±76% versus the submarket occupancy of ±96%.”
  • Upside in Market Rents: there is further upside in raising existing tenants' rents to market rental rates.”

 

Why are you buying these properties?

Andy Sinclair, Midloch Investment Partners: "Midloch is acquiring the property due to a variety of factors including the strong location, value add opportunity, and in-demand product type. The property is located in two desirable industrial submarkets in the Minneapolis/St. Paul MSA. The Midway submarket is located directly between the two cities, has no inventory under construction, and 5.8% year-over-year rent growth. The Southwest submarket is located in Bloomington with immediate access to I-494 and I-35W and also boasts 5.8% year-over-year rent growth. In addition to strong locations, the properties provide an opportunity to create additional value through bringing in-place leases to market levels upon expiration and leasing up currently vacant suites. Lastly, the broad desirability of well-located industrial continues to grow. Last mile properties are remaining in strong demand by distribution tenants, and national investors are continuing to set their sights on acquiring industrial portfolios."

 

What are the most important aspects of this investment opportunity for the investors?

Andy Sinclair, Midloch Investment Partners: "There are a variety of aspects that make this a strong offering for investors. First of all it is a two-property portfolio with 17 unique tenants. This creates an element of diversified cash flows to help offset the risk of any one tenant vacating. Additionally, the existing vacancy provides an opportunity to enhance the already strong cash flow by further leasing up the building and diversifying the rent roll. Finally, the two-property portfolio nature of the investment provides unique liquidity options. After creating the value through lease-up and marking rents to market, the management team will have the options to refinance the portfolio, sell the assets individually, or reach a broader investor pool by selling the two as a larger portfolio."

 

What is your investment strategy/business plan?

Andy Sinclair, Midloch Investment Partners: "4-STEP BUSINESS PLAN"

  1. "Lease Vacancies: The portfolio is currently ±76.4% occupied by 17 different tenants. Even though the properties already produce diverse in-place cash flow, the surrounding submarkets have an average occupancy of 96.3%. The strength of the two locations provides an opportunity to create value by leasing up the properties to be in-line with the market."
  2. "Raise Rents: Several lease rates at these two properties are at below-market rates due to upward pressure on market rent in Minneapolis/St. Paul. The average lease rate in the portfolio is ±$4.82/SF compared to neighboring properties leasing at market rents of ±$5.00/SF - $6.00/SF."
  3. "Cash Flow: The investors are projected to earn an ±8.03% average annualized cash yield, with robust cash flow starting in year 2 after the completion of the projected lease-up."
  4. "Prepare for a Sale:Upon the completion of the business plan, the management team will assess several liquidity options including selling the properties as a portfolio, selling them as individual assets, or refinancing the portfolio."

 

How has COVID-19 impacted your business plan?

Andy Sinclair, Midloch Investment Partners: "COVID-19 has undoubtedly had an impact on much of the real estate industry. There were already a lot of tailwinds for industrial real estate in the years leading up to COVID-19 as the prominence of ecommerce continued to develop. These tailwinds strengthened during the pandemic as more individuals turned to the internet for their shopping needs. The strengthening demand for warehouse space has turned significant attention to the asset class as year over year rent growth outperforms many projections."

What is your investment strategy/business plan?

Andy Sinclair, Midloch Investment Partners: "There are a few potential challenges that the investment may face. One risk that the management team is aware of is the increased cost of operating expenses and how that my impact the ability to grow market rental rates. If expenses grow too quickly and are passed through to the tenants, the total cost of leasing could become out of market. In order to address this the management team has projected market rents at $0.25/SF - $0.75/SF lower than other comparable properties in the submarkets. Another challenge that the management team could face is the ability to lease out the mezzanine space at Fairview. In order to mitigate the risk the management team has engaged with two potential tenants during due diligence, and has set up financing in a way to be able to lease the space out to both warehouse users as well as office users. Finally, a third potential challenge is that an increase in borrowing costs could impact cap rates and ultimately the sale price of the portfolio. In order to mitigate this the management team has put together a value add strategy to increase the property's cash flow in order to offset any increase in cap rates. Additionally, the financial projections take into account an increase in market cap rates when calculating the sale proceeds."

 

NOTE: All answers provided by the sponsor, Midloch Investment Partners, or its representatives.

"Midloch retains approval and voting rights over all major decisions. Midloch's operating partner and Co-GP, Fountain Real Estate, has minority management rights and will oversee day-to-day management and leasing. Please see the PPM for more details. The Joint Venture Agreement between the Midloch Co-GP and Fountain Co-GP is available upon request from qualified investors."

About this Property

"A last-mile industrial portfolio comprised of 532,005 square feet of Class B warehouse space located in two desirable first ring submarkets of the Minneapolis/St. Paul MSAs."

-Andy Sinclair, Midloch Investment Partners

Square Footage 532,005 sq. ft.
Current Occupancy 76.4%
Purchase Price $34,600,000
Price/Sq. Ft. $65.04/Sq. Ft.
Loan to Value 68.4%(1)
Stabilized Loan to Value 61.4%
(1) The industrial portfolio will be financed with a $23,650,000 loan at a 68.4% loan-to-value (purchase price) at closing. The interest rate is fixed at 3.65%. The loan provides a line of credit / loan advance that can be used for building improvements, tenant improvements, or other general needs.
Property Addresses

Fairview

655 Fairview Ave N
St. Paul MN 55104

Penn

9231 Penn Ave S
Minneapolis, MN 55431

Year Built 1952 1967
Year Renovated 2021 1998
Square Footage 313,106 sq. ft. 218,899 sq. ft.
Current Average Rents $5.29/SF $4.29/SF
Average Market Rents $5.75+/SF(2) $5.00+/SF(2)
(2) These represent underwriting for market rent, however some Class B lease rates are higher in the surrounding areas.

Top Questions

All answers are provided by the sponsor, Midloch Investment Partners, or its representatives.

Why do you like these properties?

Andy Sinclair, Midloch Investment Partners:

  • Strong Locations: These properties are well-located Class B last-mile industrial properties in first ring submarkets. These properties have easy access to I-94, I-35, I-494, and the Minneapolis-St.Paul Airport.”
  • Limited Leasing Needed: This Last Mile Industrial portfolio is a value-add light deal. The occupancy is about ±76% versus the submarket occupancy of ±96%.”
  • Upside in Market Rents: there is further upside in raising existing tenants' rents to market rental rates.”

 

Why are you buying these properties?

Andy Sinclair, Midloch Investment Partners: "Midloch is acquiring the property due to a variety of factors including the strong location, value add opportunity, and in-demand product type. The property is located in two desirable industrial submarkets in the Minneapolis/St. Paul MSA. The Midway submarket is located directly between the two cities, has no inventory under construction, and 5.8% year-over-year rent growth. The Southwest submarket is located in Bloomington with immediate access to I-494 and I-35W and also boasts 5.8% year-over-year rent growth. In addition to strong locations, the properties provide an opportunity to create additional value through bringing in-place leases to market levels upon expiration and leasing up currently vacant suites. Lastly, the broad desirability of well-located industrial continues to grow. Last mile properties are remaining in strong demand by distribution tenants, and national investors are continuing to set their sights on acquiring industrial portfolios."

 

What are the most important aspects of this investment opportunity for the investors?

Andy Sinclair, Midloch Investment Partners: "There are a variety of aspects that make this a strong offering for investors. First of all it is a two-property portfolio with 17 unique tenants. This creates an element of diversified cash flows to help offset the risk of any one tenant vacating. Additionally, the existing vacancy provides an opportunity to enhance the already strong cash flow by further leasing up the building and diversifying the rent roll. Finally, the two-property portfolio nature of the investment provides unique liquidity options. After creating the value through lease-up and marking rents to market, the management team will have the options to refinance the portfolio, sell the assets individually, or reach a broader investor pool by selling the two as a larger portfolio."

 

What is your investment strategy/business plan?

Andy Sinclair, Midloch Investment Partners: "4-STEP BUSINESS PLAN"

  1. "Lease Vacancies: The portfolio is currently ±76.4% occupied by 17 different tenants. Even though the properties already produce diverse in-place cash flow, the surrounding submarkets have an average occupancy of 96.3%. The strength of the two locations provides an opportunity to create value by leasing up the properties to be in-line with the market."
  2. "Raise Rents: Several lease rates at these two properties are at below-market rates due to upward pressure on market rent in Minneapolis/St. Paul. The average lease rate in the portfolio is ±$4.82/SF compared to neighboring properties leasing at market rents of ±$5.00/SF - $6.00/SF."
  3. "Cash Flow: The investors are projected to earn an ±8.03% average annualized cash yield, with robust cash flow starting in year 2 after the completion of the projected lease-up."
  4. "Prepare for a Sale:Upon the completion of the business plan, the management team will assess several liquidity options including selling the properties as a portfolio, selling them as individual assets, or refinancing the portfolio."

 

How has COVID-19 impacted your business plan?

Andy Sinclair, Midloch Investment Partners: "COVID-19 has undoubtedly had an impact on much of the real estate industry. There were already a lot of tailwinds for industrial real estate in the years leading up to COVID-19 as the prominence of ecommerce continued to develop. These tailwinds strengthened during the pandemic as more individuals turned to the internet for their shopping needs. The strengthening demand for warehouse space has turned significant attention to the asset class as year over year rent growth outperforms many projections."

What is your investment strategy/business plan?

Andy Sinclair, Midloch Investment Partners: "There are a few potential challenges that the investment may face. One risk that the management team is aware of is the increased cost of operating expenses and how that my impact the ability to grow market rental rates. If expenses grow too quickly and are passed through to the tenants, the total cost of leasing could become out of market. In order to address this the management team has projected market rents at $0.25/SF - $0.75/SF lower than other comparable properties in the submarkets. Another challenge that the management team could face is the ability to lease out the mezzanine space at Fairview. In order to mitigate the risk the management team has engaged with two potential tenants during due diligence, and has set up financing in a way to be able to lease the space out to both warehouse users as well as office users. Finally, a third potential challenge is that an increase in borrowing costs could impact cap rates and ultimately the sale price of the portfolio. In order to mitigate this the management team has put together a value add strategy to increase the property's cash flow in order to offset any increase in cap rates. Additionally, the financial projections take into account an increase in market cap rates when calculating the sale proceeds."

 

NOTE: All answers provided by the sponsor, Midloch Investment Partners, or its representatives.

"Midloch retains approval and voting rights over all major decisions. Midloch's operating partner and Co-GP, Fountain Real Estate, has minority management rights and will oversee day-to-day management and leasing. Please see the PPM for more details. The Joint Venture Agreement between the Midloch Co-GP and Fountain Co-GP is available upon request from qualified investors."

Offered By

Login or Register to See More Details

Available to Registered Users

  • Get to know the sponsor behind the offering with key information
  • See an overview of their experience and success
  • Understand their investment strategies
  • Easy access to contact the sponsor directly to learn more
Assets Under
Management

Currently
$416MM 30+ assets
Exited
$180MM 10+ assets
Portfolio LTV
59.9%  
Historical
Realized Returns

Total IRR
48.9%  
Equity Multiple
1.92x  
Annual Cash
N/R  
Years Of
Experience

As Principals
30+ years  
In Business
3 years  
Size
33 Staff * Dedicated investor relations
* All information is reported by Midloch Investment Partners as of 6/18/2020.
Assets Under
Management

Currently
$416MM 30+ assets
Exited
$180MM 10+ assets
Portfolio LTV
59.9%  
Historical
Returns

Total IRR
48.9%  
Equity Multiple
1.92x  
Annual Cash
N/R  
Years Of
Experience

As Principals
30+ years  
In Business
3 years  
Size
33 Staff * Dedicated investor relations
* All information is reported by Midloch Investment Partners as of 6/18/2020.

Financials

Login or Register to View Financials

Available to Accredited Investors:

  • Get an overview of important financial details to make a smarter investment
  • Analyze the financial pro forma to see how projected returns are distributed over time
  • Review source and uses and other important details
Offering Financial

Sponsor Diligence Report

Login or Register to View Report

Available to Accredited Investors:

  • View principal experience
  • Review background check results
  • Track record verification
Diligence Preview

Location Details

St. Paul & Minneapolis, MN

Andy Sinclair, Midloch Investment Partners: "The properties are located in the sought-after Midway and Southwest industrial submarkets of Minneapolis. The Midway submarket is situated directly in between the Minneapolis and St. Paul submarkets and provides direct access to each of the city centers. The Fairview property is located in the Midway submarket, which is a last-mile location that continues to display strong demand with 97.4% submarket occupancy and 5.8% year-over-year rent growth. The Southwest submarket is the Twin Cities’ largest industrial submarket in terms of inventory. It remains a desirable location for logistics users due to its location along I-494 and I-35. This demand is reflected in the 95.4% submarket occupancy rate along with the 5.8% year-over-year rent growth."

Documents

Login or Register to View Documents

Available to Accredited Investors:

  • View, download, and print the offering PPM (Private Placement Memorandum)
  • View, download, and print the detailed financial projections
  • Access all of the important documents for this offering in one place
Offering Agreement Documents

Frequently Asked Questions

Below are some of the most frequently asked questions about this offering.

RealCrowd is free for investors. RealCrowd charges a technology access fee to the operating partner for our services. We do not charge investors any upfront fees, ongoing asset management fees or promote/carried interest in the investments.

RealCrowd offerings are open to accredited investors. RealCrowd does not recommend or advise on any offering on our platform. While we have minimum history and experience threshold for sponsors who post on our platform, if you are unable to perform your own due diligence, please consult with an attorney or financial advisor prior to making an investment.

RealCrowd is a marketplace that connects investors with qualified sponsors. We strive for transparency and impartiality. For this reason, we do not participate in any offerings on our site.

Have a Question?

Send Midloch Investment Partners and/or RealCrowd a message. If you have a question about this offering ask Midloch Investment Partners. If you have a question about the transaction process or other general inquiry, RealCrowd will be happy to help.

Please resolve the captcha and submit.

We'll get back to you soon!

In the meantime, you can create an account to view detailed information about Minnesota Last Mile Industrial Portfolio.

In the meantime, please review the offering documents and financials.