On April 19, Hilco Real Estate realized their goal of marketing and selling a 50,000 SF flex warehouse in Fort Worth. The property, located on 13.72 acres, was owned by MKS Real Estate, LLC. MKS filed chapter 11 bankruptcy in 2022 and Hilco was contracted to market the property in order to make the creditors whole. The $11.8mm sale to TKG Management, Inc, a private real estate group located in Columbia, MO, succeeded in making the creditors whole.
HRE launched a national marketing campaign for the property and was able to garner much interest (not surprising, given the industrial market in the Metroplex). The hot market allowed for them to get the asset under contract three weeks ahead of schedule with final closing occurring within three weeks of that.
Hilco's director of business development, Ben Zaslav, spoke to the value that Hilco added to this deal:
Our team's knowledge of the bankruptcy code and real estate sales provides our bankruptcy clients with the best chance to maximize the value of their commercial real estate assets. Providing effective, actionable solutions and speed-to-value, is in part, what sets Hilco Real Estate above its competition.
It is no wonder that the property was able to sell so quickly. Strong growth in the area has created value far beyond simple cap rate compression. The Metroplex offers a strong service sector, a unique central national logistics hub, and great opportunity for further growth in heavy industry. Steve Madura, a senior vice president at Hilco, spoke to the strength of the market:
Whether as a commercial investment or end-user opportunity, this sale was perfectly set to leverage Fort Worth's booming economic growth and current activity, regardless of the unpredictable market rates seen throughout the country. Ultimately, this sale provided the debtor with the ability to pay all creditors in full, and afforded the buyer an incredible opportunity to further cement their footprint in this area and expand their business operations. We consider this a win-win for all.
The bankrupt sellers may have a tough time agreeing that it is a "win-win for all", but it is certainly a win for creditors and the buyer.
Savvy investors should keep an eye out for distressed properties such as this warehouse. Rising rates may cause refinancing troubles for owners, creating opportunity for investors with dry powder available.