FedEx terminal scooped up

Hey there, time traveller!
This article was published 10/02/2021 (1796 days ago), so information in it may no longer be current.

Last year, the first of the pandemic, managed to even take the shine off Winnipeg’s industrial real estate market, but 2020 ended with what observers say is the largest industrial real estate deal in the city’s history.

The paint was barely dry on the 248,000-square-foot FedEx distribution and sorting facility, completed in October in St. Boniface Industrial Park, when the facility was scooped up at year’s end by Toronto’s Crestpoint Real Estate Investments Ltd., a real estate investment fund, for $60 million.

Last year saw half the total of institutional real estate deals as the year before — $335 million — but this deal is seen by some as a testament to the attractiveness of the market.

According to Trevor Clay of Capital Commercial Real Estate Services Inc., the broker of the deal, it was the largest single industrial asset sale in at least 15 years and maybe ever.

It is also potentially a sign of things to come, both in terms of institutional investment interest in industrial properties in Winnipeg and also regarding the demand for e-commerce oriented, high volume distribution centres.

In October, Amazon announced a 113,000-square-foot distribution centre for last-mile deliveries in the city and sources say that it is not likely the only facility Amazon will acquire in the city and that another one is close to being finalized.

Clay had been involved in the FedEx project for a while, working with the developer, Scannell Properties out of Indianapolis.

“For us, it was a two-year project from beginning to end,” said Clay. “But if the question is how hard is it to sell an asset of that size and value in this market, I would say it is not hard to find interested buyers. Demand is not an issue.”

But for all sorts of reasons, mostly COVID-related, building owners are reluctant to put their assets on the market, not unlike residential home owners.

“There is lots of money out looking for industrial space,” said Clay. “If we had three or four more of these types of properties we definitely could have three or four more buyers interested.”

But having said that, Don White, a commercial property veteran in the city, said the FedEx distribution centre was a bit of an outlier in terms of the attractiveness of the asset and that it has a long-term lease with a blue-chip tenant.

“You’ve got a U.S. developer with a strong development relationship with an international tenant who builds a very large design built asset in Winnipeg, which is then sold to a very successful Canadian institution buyer who is building a presence here in the city,” said White, CEO and co-founding partner of Private Pension Partners and executive vice-president at Colliers,. “It tells a pretty good story.”

Scannell has built other FedEx distribution centres around the world and it is not uncommon for it to sell a property so soon after completion.

With a 15-year lease with a high profile tenant like FedEx, Crestpoint, with $5.5 billion of assets under management, gets a reliable long-term income stream.

It’s the second Winnipeg property acquisition for Crestpoint in just over a year and another indication of how attractive this market is for institutional investors.

In a company release, Kevin Leon, President and CEO of Crestpoint, said, “This asset… (provides) the fund with geographic diversification and exposure to a high-quality core industrial asset. Given its central location within the Winnipeg market and the long term commitment from such a reputable tenant we are really excited to add this asset to our fund.”

martin.cash@freepress.mb.ca