An international real estate firm hungry to acquire even more Memphis industrial buildings has just purchased most of a distribution park in southeast Memphis for $16.5 million.
Israel-based Faropoint Ventures bought six industrial and flex-space buildings at Willow Lake Business Park. The buildings total 545,000 square feet, said Brian Califf, executive vice president of NAI Saig Co.
The most recent purchase brings Faropoint Ventures’ holdings in Memphis to more than 5 million square feet of industrial and office properties.
“They will continue to deploy funds throughout 2019, and are actively seeking to purchase another $30 million in industrial and flex properties in the area,” Califf said.
The Willow Lake Business Park buildings that Faropoint bought are: 5270 E. Raines Road; 4000 Willow Lake; 3966 E. Raines; 4101 Willow Lake; 5146 E. Raines; and 5070 E. Raines.
With the purchase Faropoint owns seven buildings in the nine-building business park. Nearly a year ago, the real estate investment firm bought a former, 220,000-square-foot office building at 4049 Willow Lake. Faropoint immediately converted the space for warehouse uses.
“With the success of that project they saw this as a good time to purchase most of the remaining buildings in the business park,” Califf said.
The investor also will convert one of the buildings it just bought from office to industrial. That 75,000-square-foot building had once housed offices for International Paper Co., but has been vacant in recent years.
In total, the seven Faropoint buildings are 75 percent occupied, Califf said.
Faropoint plans to improve the park, including enhancing the landscaping and lighting.
The surrounding district is mostly industrial, which is why Faropoint will have converted two office buildings to industrial space.
“It’s near the airport, near the railyard and there are not many office uses that are looking in the southeast (Memphis) area,” Califf said. “Most of our office users are based at Interstate 240 and Poplar.”
Among the existing tenants of Faropoint Ventures’ newly acquired buildings are FedEx, which has a training center there for delivery drivers; Batesville Logistics, a large distributor of caskets; and XPO Logistics.
While Faropoint has purchased in the last few years office buildings like Poplar Towers and the Lipscomb Pitts Building, the firm is now focusing on buying more industrial and flex space around Memphis, Califf said.
“They are happy with their current holdings of office and retail properties, but for the future they are only looking at industrial and flex properties,” he said.
“They like the position Memphis is in as far as a logistics town,” Califf said. “We’ve got the right amenities between rail, air and barge to accommodate users.
“And our industrial rental rates are still below the national average with room to grow,” he said. “And that’s attractive to Faropoint as an investor, to be able to grow that rent over time.”
While Califf and NAI Saig represented Faropoint in the deal, Avison Young represented the seller, Willow Lake Business Park LLC.