Investcorp has purchased a portfolio of industrial properties in the Midway in St. Paul for $158 million and is now the new equity partner in a joint venture with Capital Partners, according to certificates of real estate value released last Friday.
Eighteen total properties in the Midway Mile Industrial Campus traded in the transaction, which sneaks in one final portfolio deal into 2024, a year marked by an increase in money spent on such trades.
Peter Mork, principal for Capital Partners, told Finance & Commerce that the deal was a recapitalization, bringing a cash infusion to the property after DRA Advisors, the original equity partner on the site, decided to leave their role.
Mork said Investcorp, a global investment management firm, liked the renovations done by Capital Partners and DRA, noting the environmental upgrades and cleaning done to the site was something that sparked the group's interest. Mork said the process to ensure the site was environmentally sound took five years of working with the Minnesota Pollution Control Agency.
In 2019, DRA and Capital Partners acquired the portfolio together from Clarion Partners. The industrial park is located near the border of Minneapolis and St. Paul.
Properties included in the recapitalization include:
So far, only two CRVs have been revealed, showing a price tag of $109.2 million. However, Mork said during an interview with Finance & Commerce that $158 million was reflective of the total price of the recapitalization deal.
Mork said that when the properties were bought with DRA, there were some vacancy issues, but he said now that they were able to renovate it to market standards, doing work on the roof, parking lots and other cleaning up of the site. He said after the portfolio was brought to market for a private equity partner, the site received 20 bids.
"They're older buildings, but they're not functionally obsolete, which is the best thing about them," Mork said. "They've got good clearing height, they've got good parking, some outside storage. Location is excellent. ... It really works well for a majority of those local and regional tenants that are looking to serve the inner core."
CBRE's Judd Welliver and Bentley Smith arranged the transaction.
With the University of St. Thomas campus to the south and the University of Minnesota Twin Cities campus to the west, the Midway Mile campus is somewhat sandwiched by institutions of higher education. This, he said, has brought benefits like safety and a strong neighborhood workforce.
"I would say the Midway location is only getting better with the breweries and smaller restaurants and new apartment development that's occurred over the last four years" he said. "I want to call it the University of Minnesota creep and the University of St. Thomas creep into this area which has really made it safer."
This deal, while a recapitalization, is one of three transactions in the Twin Cities industrial market to draw more than $100 million in 2024. The other two are the Link Logistics portfolio purchased by Centaur Capital Partners and land the Prologis portfolio bought by EQT Exeter.
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