"A 10 million fund targeting value-add and cash flowing last mile E-Commerce industrial properties. Looking to capitalize on the strong growth in the demand for industrial real estate that has risen from the tremendous growth of E-Commerce. The anticipated levered net IRR’s in 25% plus range.”

-Douglas O'Donnell, The O'Donnell Group

Top Questions

All answers are provided by the sponsor, The O'Donnell Group, or its representatives.

Why Industrial, E-Commerce and Why Now?

Douglas O'Donnell, The O'Donnell Group:

• "The US Industrial market posted its strongest quarter on record in Q4 2020. Industrial real estate enters 2021 with momentum. E-Commerce and the need for safety stock to counter potential supply chain disruptions is fueling strong demand. This will further push up asking rents and keep vacancy rates near record lows…. [1]"
• "The strong shift during 2020 that occurred in online ordering, including grocery delivery, is here to stay and will fuel demand for logistics space and cold storage….[2]"
• "Asking rents skyrocketed in Q4 to a record $8.24 per square foot a year which is up 8.3% from a year ago. This is the highest rate of annual growth on record.[3]"
• "In 2020, E-Commerce sales reached a total of $861.12 billion, 44% YOY increase.[4]"
• "E-Commerce sales, as a percentage of U.S. retail sales hit 21.3% in 2020, up from 15.8% in 2019, by far the biggest YOY jump for U.S. E-Commerce retail sales ever recorded[5]"
• "The COVID-19 pandemic and associated shelter-in-place policies have accelerated E-Commerce growth and the need for warehouse space across the nation. JLL expects E-Commerce sales to hit $1.5 trillion by 2025. The U.S. will need 1 billion square feet of new industrial space this decade to keep up with demand.[6]"
• "Class B-whether multi- or single tenant – assets are now as highly sought after by investors as Class A assets.[7]"
• "2021 is expected to be the year when several medium-to-large E-Commerce/third party logistics companies, such as The Home Depot and the major parcel delivery companies, expand their footprints by up to 50 percent.[8]"
• "Certain use types within the industrial asset class will have staying power post-pandemic. Last-mile distribution, industrial land-banking, and cold storage will continue to thrive in a competitive market.[9]"
• "Long-term population growth and urbanization trends combined with an expanding emerging market middle class support retail sales and fuel E-Commerce. High urban population densities make it easier to deliver goods, with faster delivery times increasing consumer convenience. In our view, the E-Commerce theme offers attractive long-term investment opportunities.[10]"

        “Sources available on request.”

What are the benefits of Industrial Real Estate?

Douglas O'Donnell, The O'Donnell Group: “Industrial Real estate offers a hedge against inflation, long term capital appreciation, current income, low tenant turnover costs, and an asset class that has no substitutes.  Everything goes through a warehouse and there are no substitutes.  In addition, E-Commerce sales are anticipated to double between 2020 and 2025 according to JLL which will increase the need for industrial warehouses and raise rental rates.”

What is your investment strategy/business plan for the Fund?

Douglas O'Donnell, The O'Donnell Group: "The objective is of Fund VIII is to invest in 3-5 industrial properties with an acquisition value in the $5 million to $20 million range. These properties are too small for institutional investors are too big for private 1031 exchange buyers.  Therefore, the O’Donnell Group is able to find lucrative opportunities in this niche size range.  The O'Donnell Group will capitalize on the strong growth of last mile E-Commerce industrial real estate, strategically purchase in-fill last mile value-add industrial buildings and then aggressively market them to tenants and users.  Industrial buildings are attractive to all product suppliers in addition to E-Commerce tenants. Henceforth, industrial buildings can accommodate all users in the E-Commerce space or not.”

What are the most important aspects of the fund for investors?

Douglas O'Donnell, The O'Donnell Group: "This strategy is to buy value add industrial properties in infill markets next to airports and population centers.  The goal is to provide investors net IRR returns in excess of 25%. The Fund will acquire last mile infill industrial buildings, fix them up and then lease and sell them to investors or users.   

What are the risks and how are you mitigating those risks?

Douglas O'Donnell, The O'Donnell Group: "Before acquiring a last mile industrial property for the fund, The O'Donnell Group focuses on buying in-fill industrial properties that have below market rents and are offered below replacement costs.  The properties are then retrofitted (new paint, landscaping, entrances, paving, etc…) and leased or sold to users at higher market rents."   

How has COVID-19 impacted your business plan?

Douglas O'Donnell, The O'Donnell Group: “COVID-19 has positively impacted industrial real estate as more and more people buy their goods online instead of at retail and grocery stores.  The COVID-19 pandemic and associated shelter-in-place policies have accelerated E-Commerce growth and the need for warehouse space across the nation.  During 2020, people were forced to purchase groceries and consumer goods online and therefore they have become used to it. The convenience and speed of delivery are not trends but the future.”