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Realized Deal : East Nashville’s Callis Road Industrial Development

Sponsored By Griffin Partners

Risk Profile
Development
Amount Invested
$5,365,000
Targeted IRR
18.5%
Actual IRR*
116.7%
Targeted Equity Multiple
1.77x
Actual Equity Multiple*
3.02x
Targeted Hold Period
3.5 years
Actual Hold Period
1.4 years

Griffin Partners launched East Nashville’s Callis Road Industrial Development on the Marketplace in September 2020. The 375,000 RSF, four-building, Class A industrial development project was located in the high-barrier-to-entry Wilson County Submarket, in Lebanon, TN. The project's business plan focused around capitalizing on the lack of product sufficient to serve smaller users performing last-mile delivery, while also servicing other industrial clients and larger corporate users. This was done by dividing the 375,000 SF into rear-load spaces of 15,000 and 25,000 SF, giving the project the flexibility to build out smaller spaces, accommodate larger tenants needing 25,000-50,000 SF, or lease an entire building to a single 75,000-100,000 SF tenant. At the time of underwriting, the Nashville industrial market had a relatively large rent delta between the big box and small bay products ($0.35/SF/month versus $0.75+/SF/month), and the flexibility of bay size allowed the project to capture this rent delta or "gap in the market."

Project Timeline

Construction

September 2021

Construction of East Nashville’s Callis Road Industrial Development went relatively smoothly. Even with ~100 unavoidable weather delay days, delivery of buildings A, C, and D were less than 60 days behind the original timeline. Throughout Q3 and Q4 of 2021, 8-10 subcontractors were working onsite concurrently, and no safety incidents occurred during the entirety of development. At the time Callis Road Industrial went under contract for sale, approximately 75% of the originally projected budget had been spent and, due to the forward sale, Griffin Partners did not spend the remaining budgeted capital for anticipated leases due to the sale upon delivery of the project.

Tenant Demand

January 2022

With approximately 1.8 million SF of competitive industrial projects under construction at the time this development project began, the Callis Road Industrial Development set itself apart as one of the only developments in Eastern Nashville catering to mid-size users. While Griffin Partner’s primary focus was to target smaller users who typically pay a rent premium, they were also looking to lease space to larger users if the rents were beneficial for the overall project. In the months prior to realization, the Griffin Partners received proposals from several leasing prospects at rents higher than those underwritten but held off on intensely pursuing those options while the sale of the unoccupied building was pending.

Successful Forward Sale

March 2022

The original business plan projected a sale after 3.5 years once the buildings were fully leased for approximately $41.2 million. Griffin Partners successfully sold the project on a forward basis on March 11th, 1.4 years into the deal. The final sale price was $62.3 million.

Final Outcome

Extremely favorable market conditions and a successful business plan execution created the opportunity for Griffin to exit the investment earlier than planned and achieve higher-than-expected returns for investors.

*Net of the most onerous fees charged to clients of CrowdStreet Advisors, LLC, our registered investment advisor subsidiary; an investor’s actual returns on a realized investment may differ.

This report contains explanations of a series of events associated with the East Nashville’s Callis Road Industrial Development offering that resulted in an approximate % (net of most onerous fees) IRR to investors (including those from the CrowdStreet Marketplace). Certain aspects of the report such as dates of major events and the final outcome are easily verifiable while others, particularly underlying reasons behind the sponsor’s business plan execution, are not.

The report partially relies upon the sponsor’s explanations, the information contained within sponsor-produced quarterly reports, and conference calls. This analysis is not an assertion of independently verified facts but, rather, is for informational purposes only, to convey CrowdStreet’s understanding of what transpired.

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