Thursday, June 11, 2020

Fundrise acquires distribution center leased to PepsiCo

Online investment platform Fundrise (a Real Estate Investment Trust) has acquired a new class-A distribution center with an in-place lease to PepsiCo. in Capitol Heights, Md, for roughly $7.8 million. The property is located less than 30 minutes from downtown Washington, D.C., directly inside the Capital Beltway.

Completed last year, the building was specifically designed for Frito-Lay (a division of PepsiCo) to utilize as a last-mile distribution facility serving its customers in the national capital region.

A last-mile distribution center, also referred to as a terminal building or sorting center, acts as a handoff point to connect 18-wheeler trucks, which typically carry goods in bulk across longer distances, with the smaller vehicles that make the final leg of the journey to drop off packages at individual homes and businesses.

While it’s critical that these types of facilities are located close to major population centers and easily accessible to the major highways, the availability of industrial zoned land that meets this criteria (generally speaking) is in increasingly short supply, which Fundrise believes will help drive long-term values.

The property was completed as a “build-to-suit” for PepsiCo, meaning that the location was selected by the company based on its attributes, and then the building itself was specifically designed in collaboration with the company to meet the exact specifications of its business needs. Although, unlike many e-commerce companies, Pepsi/Frito-Lay primarily delivers to small businesses, the company recently announced it was launching, a new direct-to-consumer business to offer customers “another way to purchase products they love” and have them “delivered directly to their door.”

“PepsiCo is the sole tenant at the property and, as of our acquisition on June 1, had nine years remaining on their initial lease term with multiple options to extend,” Fundrise said on Thursday. “Our goal is to earn regular rental income from the property and then eventually to sell it for more than we spent on the acquisition."

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