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From the Desk of Bob Mohr: 2021 Deal Recap

In 2021, Mohr Capital completed 18 transactions for a total deal volume of $250 million.

A new year has begun, and if you’re like most people, you’re happy to close the books on 2021. However, while the pandemic persists and new variants trigger new waves of uncertainty every few months, it would be a mistake to think there isn’t – and won’t continue to be – plenty of opportunity in the commercial real estate markets.

For our part, Mohr Capital capitalized on this opportunity, marking one of the most productive years in our firm’s history. In 2021, we completed 18 transactions for a total deal volume of $250 million – an increase of 35% over the previous year. Our work in industrial development is an obvious standout, but despite a sluggish 2021 for the office and retail markets, we were still able to create and realize value on our investments.

How did we do it? By nurturing and growing a formidable team comprised of the smartest and most innovative commercial real estate professionals in the industry. With over a century of combined experience, we leverage our expertise to deploy capital in strategic ways that center around the occupancy costs of our tenants – regardless of the market sector.

Below is a rundown of our 2021 investment activity with some commentary that will give you insight into our investment strategy and the expertise of our people. I hope that your 2021 was equally successful, and I look forward to seeing what 2022 has in store.

Best,

Bob Mohr
Founder & Chairman
Mohr Capital

 

Industrial Development, Acquisitions & Dispositions

The industrial real estate market continued to see record demand and asking rents throughout 2021. Much of the demand was due to a steadily improving economy, growing e-commerce sales, and the trend toward building safety stock. Mohr Capital took advantage of this white-hot market through ongoing and new developments, as well as dispositions of well-placed facilities.

On the investment side, we took advantage of low cap rates, selling a combined 474k-SF of industrial space in Austin, Dallas-Fort Worth, and Michigan City, Indiana, to realize gains that we redeployed into new industrial deals throughout the year.

On the development side we completed, delivered and leased over 1.8 MSF of industrial space in our master-planned industrial park, Mohr Logistics Park, in Whiteland, Indiana, with an additional 3 MSF of speculative development under construction now. We also entered the Southwest markets, closing on land in the Reno-Sparks metro area and starting construction on a 596k-SF speculative development. Just before the end of the year, we also closed on an additional 50-acre site in Surprise, Arizona, for another speculative property.

We expect to deliver an additional 7 MSF of industrial space in the next two years in the Indiana, Nevada, and Phoenix markets. Through our development starts and strategic land acquisitions in 2021, we created a future industrial portfolio value to be realized in the next three years in excess of $700M.

Our industrial transactions and development activities last year included:

Mohr Logistics Park in Whiteland, Indiana

We completed construction of a 996k-SF build-to-suit warehouse for Cooper Tire in February 2021, and began speculative development on a 1 MSF warehouse, two 800k-SF warehouses, and two 125k-SF warehouses. Once complete, the Park will boast an estimated 6.5 million square feet of industrial space.

GAF Materials Office & Warehouse in Michigan City, Indiana

We completed build-to-suit development on GAF Materials’ 200k-SF facility with 23 acres of storage capacity in December of 2020. We sold the property in an off-market deal to Four Springs Capital Trust in March 2021.

Amazon Last-Mile Facility in Austin, Texas

We sold a 160k-SF last-mile facility and an adjacent 20-acre parking lot occupied by Amazon in Austin’s MetCenter Business Park in May 2021. Four Springs Capital Trust bought the property in an off-market deal, which CoStar called the “priciest of its kind in Texas.”

1500 Waltham Way in McCarran, Nevada

We closed on a 40-acre site in Reno-Sparks’ high-profile Tahoe-Reno Industrial Center and began speculative development on a 596k-SF facility in June 2021.

Frontier Communications Flex Facility in Carrollton, Texas

We sold a 113k-SF industrial flex building occupied by Frontier Communications and Transcendia to Cabot Properties in October 2021. We originally acquired the property in 2010 and replaced the roof of the entire building, among other capital expenditures.

Speculative Development Land Closing in Surprise, Arizona

We closed on a 50-acre site within Summit Business Park in Surprise, Arizona, and plan to break ground on a 700k-SF speculative development in June 2022.

Office Acquisitions & Dispositions

Throughout 2021, the office market continued to struggle as COVID-19 caused corporate tenants to either stall or reconsider their plans for returning to the office. The recently-emerged Omicron variant appears to be the most contagious yet, and poses an ongoing threat to the office market. However, while we expect COVID-19 to continue to cause hesitation among tenants, the continued economic recovery should offset some of this in 2022.

Despite the ongoing pandemic, Mohr Capital’s office investments team performed well above expectations, acquiring and divesting a profitable 112k-SF building which served as the headquarters for one of the largest healthcare providers in Wisconsin.

Our strategy of acquiring single-tenant, mission-critical facilities that began in 2020 continued in 2021. Toward the end of the year, we took advantage of a spike in medical office building investment activity, selling a much sought-after facility in Orlando and acquiring another in San Antonio.

In the new year, we’ll hone our focus on office properties that we believe will continue to outperform the broader office market.

Our office transactions in 2021 included:

ProHealth Care Headquarters in Pewaukee, Wisconsin

We acquired a Class A, 112k-SF office building and executed a 10-year lease with ProHealth Care, a leading healthcare provider in Wisconsin. The lease enabled us to create occupancy cost reductions for ProHealth and sell the property prior to the close of the year.

Alamo Quarry MOB in San Antonio, Texas

We acquired a 38k-SF multi-tenant medical office building directly adjacent to the city’s iconic Alamo Quarry Market and west of Alamo Heights, one of the most prosperous neighborhoods in San Antonio. Building occupants include Methodist Health System, Methodist Physicians Practice and Eating Recovery Center, among other medical tenants.

Accredo Health MOB in Orlando, Florida

We acquired a mission-critical 78k-SF medical office building fully occupied by Accredo Health in December 2020, after working with its parent company, Cigna, and CBRE to negotiate the company’s long-term occupancy requirements. We sold the property in December 2021.

Retail Acquisitions, Dispositions and Redevelopments

While retail was arguably the hardest hit asset class in 2020, the market did see some resurgence in 2021. Indeed, as more people opted to avoid the crowds and eat take-out, restaurants that could satisfy this demand saw their best numbers ever. In Q1 and Q2, single and multi-tenant cap rates continued to compress as 1031 buyers engaged in a flight to quality, while large shopping centers failed to move as quickly due to ongoing struggles with credit among mom-and-pop retailers.

In 2020, the focus for Mohr Capital was acquiring existing assets, providing rent relief and extending leases. In 2021, we shifted gears, selling well-positioned properties in core major markets in Ohio and Texas, and focusing our efforts on building programmatic relationships with credit retailers and starting build-to-suit projects in Oklahoma City and the Denver metro area.

This year, we’ll continue to seek build-to-suit opportunities with retailers that have continued to fare well throughout the pandemic like quick-serve restaurants and financial institutions, as well as look for opportunities in grocery-anchored retail centers.

Our retail transactions in 2021 included:

Texas Roadhouse in Steubenville, Ohio

In 2019, we acquired the ground lease on a one-acre outparcel in a highly visible, high-performing location across the street from Fort Steuben Mall, 40 miles west of Pittsburgh. After providing Texas Roadhouse initial rent relief and securing an extended lease term, we sold the ground lease in March 2021 as the operator experienced a rise in sales due to vaccinations and the easing of social restrictions.

Dutch Bros Coffee in Oklahoma City, Oklahoma

We acquired an existing Taco Bueno restaurant in Oklahoma City – blocks away from Oklahoma City University – for redevelopment as a Dutch Bros Coffee, marking our first retail investment in Oklahoma. The build-to-suit development is currently under construction and scheduled for completion this year.

Regions Bank & Chipotle in Magnolia, Texas

In 2020, we acquired an existing 7 Leguas Mexican Restaurant building just northwest of The Woodlands. After razing the site and splitting it into two pads, we secured a 20-year ground lease with Regions Bank and a 20-year lease on a build-to-suit with Chipotle. We sold the Regions’ ground lease in May 2021 and completed and sold the Chipotle redevelopment in September 2021.

BOK Financial in Stapleton, Colorado

We closed on the build-to-suit development of a 4k-SF BOK Financial branch in the Denver metro area. We secured a 15-year lease, and the building is slated to open later this year.

Interested in starting a conversation with Mohr Capital?

Mohr Capital is actively seeking opportunities for the acquisition and development of officeindustrial and retail assets across the country. To learn more, contact one of our team members today.

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