Plymouth Industrial REIT reeled in over $250 million in a partnership with Sixth Street Partners on a portfolio concentrated in Chicagoland.
San Francisco-based Sixth Street will put in $116 million for a 65 percent stake in Boston-based Plymouth’s Chicago-area holdings, comprising 34 properties totaling 5.9 million square feet. The investment gives the portfolio a gross asset value of $356 million when factoring in $178 million in mortgages on the buildings, CoStar reported.
The deal provides Plymouth with approximately $212 million in reinvestment capital and positions the REIT for further acquisitions while paying down debt on a recent portfolio acquisition in Memphis.
The deal, valued at a 6.2 percent capitalization rate, comes as industrial property sales nationwide have slowed due to rising interest rates. Despite the broader slowdown, demand for industrial spaces remains robust, especially in the Chicago market.
“With this investment, we are well positioned for the balance of 2024 and 2025 as we face an evolving market with increasingly interesting opportunities,” Plymouth co-founder, chairman and CEO Jeff Witherell said.
In a parallel transaction underscoring the continued strength of the industrial sector, Chicago-based investor Brad Borkowski’s venture acquired the Woodridge Commerce Center, at 10210 Werch Drive in Woodridge, for $26.1 million, Crain’s reported. The price is a 24 percent increase over the $21.1 million that the seller, Beverly Hills, California-based Unilev Capital and an affiliate of Palladius Capital Management paid in 2021. Unilev still holds about 7 million square feet of commercial property across the Chicago area.
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The 148,000-square-foot complex, which caters to smaller “shallow bay” tenants, is 96 percent leased. The sale reflects the sustained demand for high-quality industrial properties, even as interest rates dampen broader commercial real estate activity.
While Chicago’s industrial vacancy rate hovers near a historic low of 4.9 percent, the market is drawing investors despite rising borrowing costs.