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Case Study

KPJV Class A Distribution Portfolio

In March 2012, JLL closed the sale of the KPJV Class A Distribution Portfolio for $137,250,000. The portfolio was comprised of 11 industrial buildings located in Indianapolis, Indiana and Allentown, Pennsylvania. JLL closed the sale on behalf of a joint venture between Prologis—the largest owner, operator and developer of industrial real estate in the United States—and PNC Bank.


Of the 11 industrial buildings in the portfolio, six were located in Indianapolis and five in Allentown. Five of the six properties located in Indianapolis were in Plainfield, one of the strongest submarkets for industrial buildings in the Midwest. Allentown is considered one of the top three submarkets for industrial properties in the Northeast. In 2011, Prologis and PNC approached JLL to oversee the sale of these properties.


During the fourth quarter of 2011, there was a lull in the industrial real estate market. JLL and Prologis/PNC made the strategic decision to hold off marketing the portfolio until January 2012, when potential investors would typically receive new capital allocations.


JLL brought the KPJV Class A Distribution Portfolio to market in January 2012 to a broad range of investor types. Eight of the 11 properties were considered Class A; however, when KPJV was put on the market, some of those properties were below the occupancy rate needed to be termed “stabilized.” In order to present the properties as stabilized performing assets, JLL advised ownership to lease the vacant spaces to month-to-month tenants and demonstrated to potential investors that the temporary occupants could potentially sign long- term leases or there would be minimal downtime between a short-term tenant vacating and a new tenant occupying the space.


Industrial Income Trust (IIT), a private, non-traded REIT, won the bid and purchased the KPJV Class A Industrial Portfolio. IIT’s bid was selected because IIT had completed the most up-front due diligence, reserved the most capital to address potential deferred maintenance issues and had the fastest speed–to- close. For that reason, JLL was confident that IIT would close at the contracted price and not attempt to re-trade the transaction. JLL was able to increase the purchase price by $7 million from the initial bids received from the first 16 bidders to the final price paid by IIT, therefore exceeding the client’s price expectations.


John Huguenard, SIOR, CCIM
+1 312 228 3293

Peter Harwood
+1 312 228 2124

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