Inland Empire Distribution Center (iEDC)

San Bernardino, California

San Bernardino, California

The Opportunity: The Inland Empire Distribution Center was acquired in August 2010 at an acquisition price of $50.3 million. At the time of acquisition, the property was 100% vacant. In February 2011, the joint venture that owns the property entered into a 94-month lease with Hewlett-Packard to occupy the entire property.

Result: The asset transitioned from vacancy to 100% occupancy through a long-term single-tenant lease, which resulted in an attractive property-level IRR upon the sale of the property in September 2011. The property was sold for $95 million in September 2011, generating a property-level IRR of 81.5%.

Investment Summary

Asset Type: Two single-story, cross-dock industrial buildings
Asset Size: 1.4 million square feet
Year of Construction: 2008
Acquired: 16% net joint venture interest in August 2010
Sold: September 2011

Property Highlights

  • Located at the junction of Interstate 15 and 215
  • Approximately 50 miles east of the BNSF and UPSP intermodal rail yards and the ports at Long Beach and Los Angeles
  • Purchase price of $36 per square foot, approximately 58% of replacement cost, and 50% of seller’s 2008 purchase price
  • Inland Empire market rents were at 10-year lows, with net absorption of 5.9 million square feet as of June 30, 2010, signaling the recovery underway
  • Limited new supply with construction down 95% of 2005, 2006, 2007, and 2008 deliveries

Industrial Portfolio

Behringer’s consolidated assets within the industrial portfolio include the Archibald Business Center, Inland Empire Distribution Center, and Interchange Business Center. Combined, they generated a total IRR of 24.5%.