A year later, Alterra-JPMorgan venture bulks up on $300M property play

The Philadelphia company has so far closed on buying 50 of these properties in Oregon, Arizona, Texas, Alabama, West Virginia among other states and is in the process of making other acquisitions, said Leo Addimando, managing partner at Alterra.

Last January, Alterra teamed up with JPMorgan to launch a joint venture to spend an initial $300 million to buy industrial outside storage sites. It is targeting 30 markets across the country where there’s job growth and commercial activity. The sites Alterra buys are typically near airports, ports, highways or intermodal transportation centers and between five and 30 acres with less than 25% of the surface covered by structures. Most often these properties have been used on a long-term basis by the companies that own them.

Frank Roddy of Roddy Inc., a commercial real estate brokerage, sold Alterra one of those properties last fall that fit the profile. Alterra paid $9.5 million to buy a single-story, 17,280-square-foot building on 4.43 acres at120 Minue St. in Carteret in Middlesex County, N.J. The property is leased on a long-term basis to Maxim Crane Co., which has been the sole occupant of the building for years.

“Apart from the Amazon effect, there are lots of willing sellers. Some with reasonable pricing expectations,” Addimando said.

Alterra wants to try to institutionalize this oft ignored industrial property. Though these properties are overlooked, they are ubiquitous in every community. These gritty industrial parcels are used to park cranes, tractor trailers, earth moving equipment, building materials and other products.

Alterra intends to seek a fresh round of funding from its venture partner, JPMorgan, Addimando said. The goal is to eventually cultivate a $1 billion portfolio of these industrial outdoor parcels by mid-2022.

“One of the really nice things about this real estate is it will well during unforeseen economic events,” he said, noting that they have so far had 100% rent collection during the pandemic.

While Alterra builds up its portfolio, it’s looking to the future and where it sees this effort headed. “There are several different ways this could end,” Addimando said.

One is to keep accumulating properties and use it to generate revenue to re-deploy into more acquisitions or grow to a certain point, sell and start all over again.

“To be honest, all of that is putting the cart before the horse,” Addimando said. “We want to continue to build the portfolio, go into good markets with good opportunities and get to $1 billion as expeditiously and prudently as we can.”

Alterra has brought in Bill Hankowsky, former CEO of Liberty Property Trust, an industrial real estate investment trust that was sold last year to Prologis Inc., as a senior advisor.

In a statement, Hankowsky described Alterra’s platform as “a really thoughtful real estate concept.” Hankowsy said that industrial outdoor sites “is a national opportunity that has the characteristics of the net lease sector – low capex, long lease term with strong cash flow. And at the same time has characteristics of the industrial sector – locational and geographic scarcity while seeing an increase in the long term demand for the product. I see it as an asset class which will have strong investor interest.”