New Industrial Real Estate Offering Is Targeting A 20.7% IRR

EquityMultiple, a leading real estate crowdfunding platform, has just launched its latest investment opportunity: the Saint Cloud Multi-Bay Industrial property in Saint Cloud, Florida. This fully occupied, 57.6K SF multi-bay industrial property presents an appealing opportunity for investors seeking to capitalize on the strong demand and rent growth potential in the Orlando industrial market.

The property is being acquired off-market by Ultimate Realty, a five-time repeat sponsor and Premier Partner on the EquityMultiple platform. With a minimum investment of $15,000, investors can participate in the $3.3M LP equity investment, targeting an average cash-on-cash return of 6.5%, a net IRR of 20.7% and a 1.7x equity multiple over a 3-year hold period.

One of the key attractions of this offering is the significant mark-to-market opportunity. The property’s current in-place rents represent a ~63% discount to the average market rent of $12.89 PSF NNN, with several comparable properties commanding even higher rates. As leases at the property begin to expire, Ultimate Realty plans to raise rents to market levels, potentially driving substantial cash flow growth.

Access offering details on EquityMultiple.

The investment thesis for the Saint Cloud property is further supported by the latest research from Prologis, Inc. PLD, a global leader in logistics real estate. In its February 2024 U.S. Industrial Business Indicator™ report, Prologis highlights the continued strength of the industrial real estate market, particularly in high-growth Sun Belt markets like Orlando.

According to the report, the multi-bay industrial sub-sector is experiencing extremely low vacancy rates, with competing facilities fully leased and waitlists for potential new tenants. This tight supply dynamic bodes well for the Saint Cloud property, as current tenants are likely to renew at market rates given the limited availability of alternative options.

Prologis also notes that while new industrial completions reached a record high in Q4 2023, groundbreakings have fallen sharply, signaling a significant contraction in new deliveries beginning in the second half of 2024. This shift in the supply pipeline could further bolster the Saint Cloud property’s positioning, as scarcity is likely to return to many locations, applying upward pressure on rents.

Ultimate Realty’s track record and expertise in the Orlando industrial market further bolster the investment thesis. The sponsor’s portfolio includes three industrial properties in the Orlando MSA, including two prior EquityMultiple investments and another multi-bay asset in the same St. Cloud submarket. These properties have performed well, with one investment exiting at an impressive 55.8% IRR and 2.0X equity multiple.

The Saint Cloud property itself is well-positioned to capitalize on the strong demand drivers in the market. Developed in 2004, the property was purpose-built for multi-bay tenant usage and features separate entry loading doors, individualized buildings/lots, high clearing heights, and ample parking and loading areas. Its immediate access to major thoroughfares like Route 192 and the Florida Turnpike provides excellent connectivity to key destinations like downtown Orlando and Tampa.

While the offering’s target returns are undoubtedly attractive, investors should carefully consider the risks inherent in any real estate investment. The hypothetical financials presented are illustrative only and not a guarantee of future performance. Thorough due diligence and a clear understanding of one’s risk tolerance are essential before making any investment decision.

That said, for investors seeking exposure to the strong fundamentals of the Orlando industrial market and the potential for significant cash flow growth, the Saint Cloud Multi-Bay Industrial offering warrants serious consideration. With its compelling acquisition basis, functional property features, and the expertise of a proven sponsor like Ultimate Realty, this investment opportunity could prove to be a valuable addition to a well-diversified real estate portfolio.

As always, interested investors should review the full offering memorandum, including the detailed risk factors, before making any investment decisions. But for those comfortable with the risks and seeking an attractive blend of income and appreciation potential, EquityMultiple’s latest offering may be worth a closer look, especially in light of the favorable market dynamics highlighted by Prologis’ recent research.

Full details of the offering can be found on EquityMultiple’s website.

Photo courtesy of EquityMultiple