Camden County industrial portfolio secures $103M financing

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PGIM Real Estate started the week with news it provided $103 million in fixed-rate financing for a 35-building Camden County industrial portfolio.

The real estate investment and financing business of PGIM, the $207.9 billion global asset management arm of Newark-based Prudential Financial Inc., announced July 17 it secured the funding as part of its core lending strategy to DRA Advisors of New York for Twinbridge Industrial Park.

The recently announced $194.5 million sale of the Pennsauken portfolio to an affiliate of DRA Advisors on behalf of a joint venture between Wharton Industrial and Walton Street Capital is “one of the largest industrial deals in New Jersey this year.”

According to Wharton, the sale achieved an internal rate of return of approximately 80%.

The 1.2 million-square-foot portfolio is located across from the Delaware River, between the Betsy Ross and Tacony-Palmyra bridges. That puts the property just 15 miles from Center City Philadelphia and in close proximity to Routes 73 and 130, along with Interstate 295.

Home to more than 70 tenants – including Nestle, PepsiCo and Sprint, according to Wharton Industrial – overall occupancy levels for the package are above 95%, a representative for PGIM Real Estate told NJBIZ.

Buyers on the hunt for deals were attracted to one of the few assets in the market as sellers try to wait out higher interest rates. Wharton acquired the property in July 2020.

“Despite others who were fearful of investing at that time, we saw the portfolio as prime real estate that we believed would weather economic uncertainties,” said Peter Lewis, founder and chairman of Wharton Industrial. “Supporting our belief were the low vacancies in the market, tightness of supply, proximity to Philadelphia and the diversity of tenants (many of whom were long-term occupiers providing essential services). Our intuition was greatly rewarded, with rents increasing more than 100% during our three-year hold, through strategic property improvements and extensive leasing management.”

Remaining ‘bullish’

According to JLL’s New Jersey Industrial Insight – Q2 2023 report, total net absorption for the second quarter in Camden County was negative 27,907 square feet. However, year-to-date net absorption in the region broke even at 0%.

In Southern New Jersey, more than 5 million square feet of space was under construction at the close of Q2, with 162,150 square feet of warehouse and distribution space at work in Camden County for the period. Looking ahead, the global real estate services company anticipates that a slowdown in construction – 3.3 million square feet started in Q2 versus the quarterly seven-year average of 4.2 million square feet – will persist amid the current capital environment.

That, JLL said in its report, will keep “vacancy in a landlord favorable environment, despite normalized demand levels.” For Q2, average total asking rents per square foot in Camden County were $9.02, according to the report.

“Although there was risk in pursuing a sale in this climate, we believed that the quality of the properties, the growing interest in small bay industrial and the fact that there would be limited competing properties on the market would outweigh any headwinds,” Lewis added. “We are obviously very pleased with the outcome.”

CBRE Vice Chairman Brad Ruppel, Executive Vice President Mike Hines and Finance Manager Liam Fahey along with Colliers’ Senior Managing Director Marc Isdaner and Senior Managing Director Ian Richman represented Wharton Industrial in the sale. Isdaner and Richman brokered that firm’s 2020 purchase of the portfolio, as well.

PGIM Real Estate Managing Director Tom Goodsite led financing for DRA Advisors on behalf of the firm.

“We’re excited to continue to build our relationship with DRA Advisors by partnering on this industrial portfolio transaction, which aligns with the focus of PGIM Real Estate’s core lending strategy,” he said in a prepared statement. “While the real estate market continues to show signs of volatility, we remain bullish on the industrial sector and are committed to lending on high-quality, well-located in-fill assets like those in this portfolio.”

DRA Advisors is a registered investment advisor specializing in real estate investment and management services for institutional and private investors. As of March 31, 2023, the company had approximately $13.5 billion in gross assets under management. According to its website, DRA Advisors’ industrial segment is comprised of 407 properties totaling 57.6 million square feet across 28 states.

In New Jersey, the company has a total of 46 properties.