485 Distribution Center

In Spring 2017 Endurance (“EREG”) acquired 485 St. Johns Road in Shiremanstown, PA, a 700,000 SF manufacturing facility, for $7M. Endurance began tracking this off-market deal in the spring of 2015 when the broker involved in the transaction, a very experienced PA industrial broker heading up the Lee & Associates branch in Eastern Pennsylvania, first made us aware of it as an eventual redevelopment play knowing Endurance’s core competency as an operator/developer of primarily bulk industrial product. Once the seller committed to preparing the Property for sale we negotiated terms and an agreement of sale was executed in late summer 2015. At that time the seller commenced its efforts to de-lease the Property and re-locate cell tower equipment off of the existing building on the Property over to a new mono-pole on the Property’s outer lot. The seller’s de-leasing process involved negotiating terminations of several leases and re-location of multiple tenants to other buildings owned by the seller. In the interim we obtained full land development approvals for the redevelopment of the site and obtained a guaranteed maximum price contract for all of the redevelopment work such that we were ready to undertake the redevelopment immediately after closing. The last of the tenants vacated in May, 2017 and we closed soon thereafter, followed immediately by the commencement of demolition.

The re-development project entailed demolition of the office and former manufacturing sections at the front of the property, followed by selective reconstruction/expansion of the two warehouse sections into 457,000 of modern bulk warehouse/distribution space and associated site-work to provide a best in class logistics facility accommodating significant loading, trailer storage, and car parking. More than 50% of the existing warehouse remained intact, save for a loading expansion and systems upgrades, while the “western” section of the warehouse footprint was demolished and re-built to modern Class A specifications.

After the redevelopment was completed, Endurance successfully leased the property to two credit tenants, XPO Logistics (137,938 SF) and Dayton Parts (318,872 SF) at top of the market rental rates.

After a two year redevelopment and leasing period, Endurance sold the 457,000 SF property for $42,500,000 or $93 PSF to an undisclosed institutional buyer through a full marketing process. The sale resulted in a property-level IRR of 44.43% and an equity multiple of 2.08x.