New Industrial Real Estate Opportunity in Oklahoma City
High potential return from a de-risked development by investing in the in-progress construction of a distribution center in a key crossroad of America.Save Your Spot
OKC Distribution Center Development
We're pleased to announce an LP equity investment to fund ground-up development for two 228,800 SF, Class A, industrial warehouses in Oklahoma City, OK. The Sponsor, Larson Capital Management (LCM), acquired the land in December 2022. In March 2023, they closed on the non-recourse construction financing and started vertical construction of the Project. The completion date is scheduled for December 2023.
The two warehouses will be well-situated in the increasingly appealing industrial market of Oklahoma City, along Interstate 40 with good visibility and frontage. The industrial/warehouse submarket has strong fundamentals with a 95.5% occupancy rate. Asking rents have increased for the past several years and the market has substantial rent growth projections.
Appealing Basis on De-Risked Development Project
- The Sponsor projects to sell the Property for $72M (nearly $20M above basis) which represents a 25% discount to comparable transactions in the region, thus making an attractive entry point for a buyer in this market.
- The project is past the soft development stage with vertical development already underway, significantly reducing the development risk profile. Completion is anticipated in ~5 months (Dec. 2023).
- The Sponsor has executed a $33M Guaranteed Maximum Price contract with ARCO which ensures the project will be delivered within the timeline and price made in the projections.(Dec. 2023).
Compelling Opportunity to Capitalize on Tight Industrial Market
- The submarket has seen increased demand for industrial space with Amazon expanding its footprint in the submarket and other metro’s top employers continuing to add to their campuses in the submarket.
- The overall desirability of the market, paired with limited availability, have kept industrial vacancies low at ~4.5%. These factors have driven rents to surge, realizing an increase of 5.9% annually.
Seasoned Sponsor and General Contractor with Strong Industrial Experience
- To date, LCM has acquired over $565M in commercial office and industrial space, totaling 3.7M SF. LCM also developed $300M of properties including 1,700+ units and 300K SF of commercial office space.
- ARCO is the 3rd largest design build firm in the U.S. with offices in 38 major markets nationwide and offers the strength and presence of a national builder with the personalized attention of a small company.
- To date, ARCO has developed 5,000+ successful projects spanning 48 states, including 7M+ SF of industrial/warehouse space.
FAQs about this Offering
What is an LP Equity Position?
“LP” stands for “limited partner” and LP investors in equity investments assume both a limited share of risk and, consequently, a limited share of potential profits as compared with the GP investor.
Equity is the riskiest but highest-upside component of investment for a commercial real estate project. Since all other parties are entitled to payment first, common equity investments carry the highest attendant risk. However, common equity investments typically have an uncapped upside on profits if the deal performs well.
What is a Distribution Center?
Warehouses are industrial buildings or facilities primarily used for storage and/or distribution of goods, including smaller regional warehouses, larger bulk warehouses, and heavy distribution centers. Building characteristics will include loading docks, dock-high doors, drive-in doors, high clearance heights, and a low percentage of office space — typically below 25% of overall total square footage.
Asset characteristics typically excluded from classification as a distribution center include:
- cold-storage facilities
- self-storage facilities, and
- truck terminal hubs
Where Can I Learn More About the Sponsor?
Check out our recent Q&A with Larson Capital Management to learn more about the Sponsor behind OKC Distribution Center Development.