Investment Overview


INVESTMENT MISSION

Industrial Outdoor Ventures is a niche industrial real estate investment platform focused on delivering outstanding, risk adjusted returns to its principals and investors through the acquisition and development, or redevelopment of Industrial Service Facilities (ISF). The sponsoring principals have a successful track record within the ISF product type averaging a stellar 87% internal rate of return (IRR) across their current portfolio.

Industrial Service Facilities (ISF) are mission critical industrial facilities that feature a significant outdoor storage component, and are leased by many middle market and Fortune 1000 companies that require storage of equipment, freight or bulk material in an outdoor storage environment.

Industrial Outdoor Ventures will capitalize on the inefficiencies of an underserved and overlooked marketplace that has unparalleled investment fundamentals. Further, we will define this fragmented niche market by aggregating a national portfolio of premium ISF’s and become the preeminent national real estate player in this category. ISF’s fall into the following categories: 

Transportation: FedEx, UPS, BNSF, Union Pacific, Schneider, ABF, JB Hunt, YRC Freight

Contractors/Suppliers: ABC Roof Supply, Safway Atlantic, HD Supply, Dayton Superior

Heavy Equipment: Caterpillar, Hertz Equipment, Mitsubishi, Navistar, GE Trailer Leasing, United Rentals

Fleets: ComEd, AT&T, Comcast, Verizon, Nicor, Direct TV, Coke, Pepsi, Orkin, Truegreen, First Student

 

Investment Fundamentals


Market & Facility Characteristics

  • High Barriers to Entry: Restrictive zoning, infill land prices, and current construction costs have created high barriers to entry, and very low vacancy rates.
  • Supply/Demand Fundamentals, strongly favor landlords, even through down cycles.
  • Investor Competition: Fragmented ownership market, underserved by sophisticated operators with deep capital reserves.
  • Vacancy Risk: Sticky tenant base with growing rents, and ability of many industries to cross-utilize similar facilities. 
  • 10% to 20% typical FAR: Land use/improvements and zoning are primary value drivers, buildings are secondary.  
  • Protection from functional obsolescence: The functional building attributes of ISF’s are driven by the ability to enter the facilities with over-the-road equipment, thus an overhaul of the nation's bridge, tunnel, and toll infrastructure would be required to render the target buildings obsolete. This is not a likely scenario in the foreseeable future. Land use, zoning and location represent the vast majority of the property's utility and overall value.
  • Single Tenant Net Leases: Industrial Outdoor focuses on single tenant, net leased properties. Typical new leases and renewals are Five (5) to Ten (10) year lease terms.
  • Asset Value: Individual asset value ranges from $2M to $10M+.        

ISF Vacancy Statistics vs. Overall Industrial Market

chart-vacancy-report-2.png

Notes:

  1. Industrial Service Facility (ISF) data is for single tenant industrial property with land site sizes equal to or greater than those indicated, for select submarkets within the subject trade areas.
  2. The availability and vacancy statistics were calculated using data from all submarkets within each trade area with the following exceptions:
    1. Chicago: South Cook County, Mc Henry County, Boone County, I-39 Corridor, Jasper County, Bureau County, Porter County
    2. Inland Empire: North San Bernardino

These submarkets were excluded because they are substantially outside the companies targeted “infill” submarket strategy and had vacancy that impacted the accuracy of the study’s intended purpose.   


Investment and Operating Strategy

Industrial Outdoor Ventures’ chief aim is to aggregate a geographically diverse portfolio of high quality Industrial Service Facilities with an emphasis on infill locations within the top 10 population centers in the US. The investment objective is to protect and return our investor’s capital; to generate and pay stable and sustainable cash distributions through active asset and portfolio management; and to maximize and realize capital appreciation in the value of our investments over the long term.


Projected Investor IRR

Ultimately, Industrial Outdoor Ventures’ goal is to create a $300M to $500M portfolio over a Five (5) to Seven (7) year time horizon. Initially however, the Fund is seeking a capital commitment for the first $100M in asset acquisitions or approximately $35M in equity. The plan is to acquire the initial $100M over the next 12-24 months and at that point evaluate the strength of the investment and the best go-forward strategy. Below are assumptions and a sensitivity table showing investor IRR’s on the initial $100M portfolio:

  • $100M aggregated portfolio size
  • Three (3) year acquisition, hold, and sell schedule
  • 65% Loan-to-cost, financing at 4% interest with a 25-year amortization
chart-sensitivity-analysis2.png

Exit Strategy

Sale to a REIT, private equity investor, or recapitalization. 


Property Management/Accounting

Industrial Outdoor will self-manage its portfolio, and generate quarterly reporting to stakeholders.


Project Leasing

Vacancy and redevelopment leasing activities will be overseen by Industrial Outdoor and executed by best-in-class third party brokerage firms in the local markets where our investments are located.

Lease renewals will be handled directly by Industrial Outdoor, however outside tenant rep brokers will be recognized and compensated should they be engaged by tenant. 


Acquisition Mix

Acquisition targets will fall into the following categories:

  • Stabilized Assets with long term leases 5 to 10+ years
  • Programmatic Build-to-Suit or Acquire-to-Suit projects with specific users
  • Speculative Development/Redevelopment
  • Sale/leasebacks
  • Vacant or short-term leased ISF properties

Create Powerful Brand Equity

Because there is not a recognized national leader that specializes in ISF’s, Industrial Outdoor Ventures will seize the opportunity to fill that void. The platform will aggressively brand and promote itself as the go-to national solution provider for outdoor storage users. The management team has extensive knowledge and relationships within the national brokerage community, national tenant base, and trade groups which it will quickly leverage to achieve this goal. 


The Team

The management team combines over 60 years of industrial real estate expertise having held key positions within national brokerage firms, REIT’s, and private equity investment. Further, the management team has extensive relationships within all the national brokerage firms, industry organizations, and directly with the user community. Finally, the team has direct experience in all aspects of acquisitions, property management, debt financing, financial reporting, construction, and development. 


Investment Opportunity

Industrial Outdoor Ventures is seeking a programmatic capital partner to make a co-investment on a 90%/10% basis to launch the portfolio. With a goal of acquiring the initial $100 million in assets over the next 12 to 24 months we are seeking approximately $32,500,000 as an equity co-investment commitment (detailed investment proforma, business plan and promoted interest structure are available in the Offering Memorandum).


Why follow the herd?

Industrial Outdoor Ventures offers an attractive investment alternative to low yield of core investments, and the uncertainty of investing in functionally challenged, traditional Class B… 

An unusual combination of defensive investing with an opportunity for significant capital appreciation.

  • Strong cash flow with high cash-on-cash yields
  • Significant discounts to replacement cost
  • Many strong credit tenants
  • Infill locations within top 10 population centers