First-of-its-Kind Single-Asset, Single-Borrower, Industrial Outdoor Storage CMBS Transaction Validates IOS Properties as an Institutional Asset Class

Fortress Investment Group today announced the completion of two industrial outdoor storage (“IOS”) refinancings totaling $708 million. The transactions included a $493 million first-of-its-kind single-asset, single-borrower (“SASB”) CMBS loan, in addition to a $215 million balance sheet loan. Both transactions were completed by funds managed by affiliates of Fortress Investment Group LLC (“Fortress”) on June 7, 2024, with financing led by Deutsche Bank.

The SASB CMBS transaction is collateralized by a portfolio of 41 West Coast IOS properties—32 properties in California, eight properties in Seattle and one property in Portland—representing a total of 1.9 million square feet of building space on 142 acres of land. Approximately 75% of the portfolio was within one mile of the nearest highway and the entire portfolio is located within 25 miles of a port. Appraisers valued the portfolio at approximately $740 million. The portfolio featured an average site coverage of approximately 31%, with demonstrated rent premia for the excess yards associated with the assets.

The SASB CMBS is a landmark transaction representing a significant validation of IOS assets as an institutional asset class. In a note published on June 11, 2024, leading real estate research firm Green Street stated, “The IOS sector has grown in popularity among institutions in recent years, primarily on the equity side. Fortress’ SASB deal is a notable milestone of the institutionalization of IOS among debt underwriters and investors.”

Tom Pulley, Fortress Global Head of Real Estate said, “Our SASB transaction, and the pricing transparency that it provides, affirms that IOS assets are treated very similarly to traditional industrial buildings from a capital markets perspective. Over time, we would expect IOS assets to be valued in line with, if not in excess of, traditional industrial assets given the zoning controls around new development and the scarce supply of infill transportation-oriented buildings.”

Fortress began its infill logistics business in 2021 and has focused on key transportation nodes of the global supply chain with a specific focus on proximity to ports. The firm has acquired nearly 120 assets in more than 100 individual transactions in the U.S. and Europe, primarily in its targeted markets of Southern California, the Bay area, Seattle, and the Netherlands.

Advisors on the transactions included Eastdil Secured (Capital Markets), Sidley Austin and Allen Matkins (Borrower Legal), and Gibson Dunn (Lender Legal).

About Fortress Investment Group

Fortress Investment Group LLC is a leading, highly diversified global investment manager. Founded in 1998, Fortress manages $48.0 billion of assets under management as of December 31, 2023, on behalf of approximately 2,000 institutional clients and private investors worldwide across a range of credit and real estate, private equity and permanent capital investment strategies.

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