Analysis of Investments

Gulf Coast Industrial

Inland

This is a non-cash flowing offering consisting of ninety-eight and a half acres of land in Addis, Louisiana. Situated upon the land are two industrial warehouse facilites that have been recently constructed and which are currently leased to Dow Chemical Company. This property is part of Dow's $4 billion investment in Dow's United States Gulf Coast Operations. 

Investment Highlights

  • Yr. 1 Cash-on-Cash 0.00%
  • Initial Occupancy 100.00%
  • Est. Time Horizon None YEARS
  • Current Cash Flow
  • Yr. 1 Cap Rate to Investor 4.68%
  • Investor Purchase Price $104,601,724
  • Total Offering Size $18,126,585

Loan Information

This offering is using assumed debt which matures in December of 2041. The loan is fully amortizing with a 4.96% interest rate and a term of 26.5 year.

  • Yr. 1 DSCR 1.0
  • Loan-to-Offering 82.67%
  • Hold Period DSCR 1.0

Tenant Information & Lease Terms

The tenant for this property is Dow Chemical Company which manufactures plastics, chemicals, and agricultural products. Dow has than 7,000 product families that are manufactured at 189 sites in 34 countries. On December 11, 2015, Dow announced that it would merge with DuPont, in an all-stock deal. The combined company, which will be known as DowDuPont, will have an estimated value of $130 billion. Upon announcement of the merger, Moody's confirmed Dow's credit rating of Baa2 with a stable outlook.

The Lease is structured as an "absolute net" lease and expires in December of 2041. The remaining lease term is 26.5 years. Dow has a right of first refusal to purchase the Property and has one option to extend for 5-years.

Key Positives

  • Dow Chemical is an investment grade company. 

  • Dow Chemical has a long-term 26.5 year lease.

  • This property was built in response to the increase in U.S. natural gas production.  

Key Risks to Consider

  • As the term for the lease is set below 10-years, the sales price for the property may decline. Additionally Dow may choose not to extend their lease. This risk may be mitigated if the sponsor sells the property before the 10th least year.

  • This property is specific to the need of Down and serves as their resin-packaging center. If demand for global plastics slows this could offset the need for this property. 

  • The 4.68% cap rate is low for this asset class. 

  • Should Dow choose to vacate the property a future sale could require significant tenant improvement costs.

Investment Sponsor Information

Inland

The Inland Real Estate Group of Companies, Inc. ("Inland"), is an industry leader and one of the nation's largest commercial real estate and finance organizations. As a business incubator, we specialize in creating, developing and supporting Inland member companies that provide commercial real estate-related services and alternative investment funds, including limited partnerships, institutional funds and non-listed and listed REITs.

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