Columbus Industrial Complex Equity

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Status

Closed

Recently funded

Accepting $10,000 - $1,000,000 investments

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Accepting $10,000 - $1,000,000 investments

Overview

Invest in an equity ownership of a 100% occupied industrial/office complex in the Columbus, OH metropolitan area. The property benefits from its two long-term tenants, the State of Ohio and Robinson Logistics, who have been occupying the space for 15 years on average. The sub-market where the property is located is supported by a deep pool of commercial renters, including Walmart, FedEx and DHL, given its desirable location as a distribution center and last mile delivery hub for the area’s over 500k population.

Columbus attracts a young and educated demographic thanks to Ohio State University and a cost of doing business that’s 2% lower than the national average. The employment growth coupled with the attractive cost-of-living has seen the population in Columbus increase by 15% over the last decade, pushing the demand for last mile distribution warehouses and office space.

The sponsor, Heritage Capital Group, expects to hold the property for approximately 5 years, collect its cash flows over the period generated by underlying rents, almost half of which are paid by the State of Ohio, and benefit from potential capital appreciation at the time of eventual sale by increasing rents or selling the upside potential to the next buyer.

The offering is expected to provide investors a targeted annualized return of 16-18%, with an annualized ~8.5% of the expected return being distributed quarterly as current income. The balance of the returns are expected to be achieved via appreciation of the property at the time of sale. Since this is an equity investment, there is potential for returns to be above or below the target range.

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Important Notes

• This offering is not available to pension plans, defined benefit plans, defined contribution plans, retirement plans, IRAs, 401(k) and 403(b) funds, and funds comprised of these plans and funds.

Highlights

Sale leaseback strategy
Strong current cash flows
Sticky tenants
Desirable location
Market dynamics
Experienced team
  • Robinson Logistics is the seller of the property and signed a new five-year lease in November of 2021 as part of the sale-leaseback transaction. The lease has an initial rate of $3.00 per SF with 3.00% annual increases, a five-year renewal option, and no termination option. As part of the transaction, Robinson achieved a rental rate below market. Robinson’s rent is roughly $2.00 per SF below market rates. If, for any reason, Robinson Logistics decided to vacate their space, the Sponsor expects to be able to re-lease it at market rates. This occurrence could result in higher net operating income and overall returns.

  • The property is 100% occupied by two long-term tenants with contractual yearly rent increases and is expected to generate an average annual cash yield of ~8.5%.

  • The property was purchased from Robinson Logistics, one of the two current tenants, via a sale-leaseback strategy. Robinson Logistics has occupied the property for 7 years and, as a condition for sale, was required to sign a new 5-year lease. The other tenant at the property is the State of Ohio. The State has been leasing the property for 24 years and has just signed another 2-year lease renewal. Due to state policy, the tenant is only allowed to sign 2-year renewals, however, the Sponsor conducted a tenant interview with the State, and they confirmed their intent to stay in the building long term. Additionally, the operational challenges and approval process for signing a new state lease is very cumbersome, which further mitigates the risk of the State of Ohio moving to a different location.

  • The property is located at 6606 Tussing Rd, Reynoldsburg, OH, approximately 10 miles east of downtown Columbus, OH. The property benefits from the I-70 (east-west highway running from Utah to Maryland) and 1-71 (running from Louisville, KY to Cleveland, OH), positioning it as a major distribution center and last-mile delivery location to support a population of +560k within a 10 mile radius.

  • According to Costar, the submarket where the property is located consists of 10.5M SF of industrial space, ~90% of which is logistics facilities. Rents on logistics properties in the submarket have increased by 6.6% over the past 12 months, and logistics annual rent growth is expected to average 4% per year over the next 5 years. \ \ In relation to the office market in the area, rent growth has averaged 2.1% over the last 10 years. Office vacancy and rent growth are expected to remain relatively flat over the next five years.

  • Formed in the mid 1900s, Heritage Capital Group is a private, third-generation, family-owned real estate investment, development and management company. Since the 1980s, Heritage has owned and managed over 10M SF of office, industrial and multifamily properties in over 20 states across the US. Its current portfolio includes over 4.9M SF of industrial, 444 units of multifamily and 1M SF of office/retail. \ \ On the 19 realized investments across industrial, office, and multifamily assets, the firm has generated 28% IRR and 2.4x Equity Multiple.

Essentials

Please refer to the Investment Memorandum in the Docs section for more details about this offering.

Capital structure

Where does Yieldstreet lie in terms of priority?

Yieldstreet’s $10.4M equity position is junior to ~$16.5M of senior debt. The senior loan was provided by one of the largest French investment banks. The remaining equity was provided by the sponsor, Heritage Capital Group.

Cash flow

How do I get paid?

Over the life of the investment, investors are expected to receive a target annualized return of 16% - 18%, net of Yieldstreet’s management fee and structuring fee as further described in the Investment Memorandum. Investors are expected to receive cash flows from two sources: ~8.5% of annualized income from property rents, which is expected to be paid quarterly, and the balance of the returns are expected to be achieved via appreciation at time of sale of the property, which is anticipated to be within 5 years.

Assets

What is the asset underlying the transaction?

The property is a two-building, 485k SF, 100% occupied, industrial/office complex in Reynoldsburg, OH. The property is located 10 miles to the east of downtown Columbus, OH. The property was built in 1977 with additions and renovations in 1980 and 1989. The first building consists of 382k SF (77% of net rentable area) of industrial logistics space with 33’ ceilings and 42 dock doors. The second building consists of 112k SF (23% of net rentable area) of office space.

The logistics space is fully occupied and operated by a third party logistics company, Robinson Logistics. Robinson provides warehouse space, fulfillment centers, shipping/receiving, packing, etc. services to other companies.

The office building is 100% occupied by the State of Ohio, rated AA+ by S&P. The tenant has occupied this space since 1997 and has spent their own funds upgrading the furnishings in recent years. The State operates two divisions of the Ohio Department of Commerce in this building and regularly holds public hearings on site. The State of Ohio’s current lease is set to expire in June 2023 and has a rate of $9.27 per SF with three, two-year extension options available. The extension options increase rent by 2.25%. Due to state policy, the tenant is only allowed to sign two-year renewals and has operated this way since the beginning of their tenancy in the building in 1997. The Sponsor conducted a tenant interview with the State of Ohio, which stated its intent to stay in the building long-term.

Returns & Management fees

Ann'l management fee

2.5%

Target ann'l net return

16% - 18%

Inv share in excess profits

100%

Target equity multiple

1.9x - 2.1x

Target ann'l cash yield

~8.5%

Schedule

Payment schedule

Quarterly + event based

Prefunded

Target term

5 years

Structure

Tax document

K-1

Offering structure

SPV

Expenses

Ann'l flat expense

0.25%

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  • Returns & Management fees

    Ann'l management fee

    2.5%

    Target ann'l net return

    16% - 18%

    Inv share in excess profits

    100%

    Target equity multiple

    1.9x - 2.1x

    Target ann'l cash yield

    ~8.5%

  • Schedule

    Payment schedule

    Quarterly + event based

    Prefunded

    Target term

    5 years

  • Structure

    Tax document

    K-1

    Offering structure

    SPV

    Expenses

    Ann'l flat expense

    0.25%

Docs

Content

Investing in private markets and alternatives, such as this offering, is speculative and involves a risk of loss, and those investors who cannot afford to lose their entire investment should not invest. Returns are not guaranteed.