Friday, June 30, 2023

Wharton Industrial sells Pennsauken portfolio for $195 million

 By Paul Schwedelson  –  Reporter, Philadelphia Business Journal

A joint venture between Wharton Industrial and Walton Street Capital has sold Twinbridge Industrial Park, a 1.3-million-square-foot industrial portfolio in Pennsauken, for $194.5 million, in one of the largest industrial deals in New Jersey this year.

An affiliate of New York-based DRA Advisors bought the 37-building portfolio. The average building is 35,000 square feet.

In 2020, New York-based Wharton and Chicago's Walton bought the portfolio from The Bloom Organization. At the time, it totaled 32 buildings and 1.16 million square feet. Wharton and Walton bought a few additional buildings since then to add to it. The site is 10 miles from Philadelphia's Center City.

“We really believed in the real estate close to Philadelphia,” Wharton Industrial Chairman Peter C. Lewis said. “It’s irreplaceable. You can’t build this anymore. There’s no more land left and you can’t get approvals. The proximity to Philadelphia is perfect."

The industrial park is close to routes 73,130, Interstate 295, and both the Betsy Ross and Tacony-Palmyra bridges into Philadelphia. PepsiCo leases space at 8275 N. Crescent Blvd. Rental car company Enterprise leases space at 9345 N. Crescent Blvd.

Properties also include three buildings totaling 153,400 square feet at 809 Hylton Road, 815 Hylton Road and 1045 Thomas Busch Memorial Highway that Wharton acquired with Walton Street in 2021.

Lewis declined to share how much Wharton Industrial paid for the Twinbridge Industrial Park portfolio. In recent years, the Philadelphia region’s industrial market has seen low vacancies and record rents, increasing the value of properties like the one Wharton just sold.

Wharton increased rents for tenants from $5 or $6 per square foot up to $12 per square foot, a testament to the high demand and low supply of the Philadelphia industrial market. The portfolio is now 97% occupied. On average, the 37 buildings were built in 1983.

Tenants include Lockheed Martin, Sprint, PepsiCo’s SodaStream and BlueTriton, which was previously known as Nestle Waters.

“It’s a mixture of credit, but a lot of it is decades-old companies or family businesses or small businesses that just pay their rent and they’re good tenants and they service the market,” Lewis said. “I love that kind of tenant.”

Wharton planned to sell the portfolio eventually, but Lewis wasn't sure of the timing. Given that high interest rates have limited buyer pools, Lewis initially thought of waiting. Once interest rates subside, there could be more potential buyers yielding a higher price.

But other sellers of comparable properties had a similar mentality. Since few comparable properties are selling, brokers convinced Lewis the portfolio could generate competition among buyers, making it an advantageous time to test the market. Lewis followed their advice and closed the deal despite the challenging financing environment. By being one of the few sellers in the market, Wharton was able to more easily attract the few buyers looking for deals.

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