The Charleston property is ideally situated for its new
role, serving stable long-term tenants in the port
logistics industry.

In mid-2006, Wien & Malkin Industrial Partners I, L.P. found an opportunity to enter the burgeoning "port logistics" market at a price that offered substantial value-enhancement opportunity. RadioShack Corporation, in the midst of a nationwide warehouse/distribution consolidation effort, was eager to dispose of its 247,000-square-foot facility in a Charleston, S.C. suburb, just three miles from the airport and a short drive from the main port.

Industrial Partners acquired the property in an all-cash transaction for total costs of $4.5 million, or $18.32 per square foot, far below replacement cost, and began preparations to re-lease the facility when RadioShack's short-term occupancy arrangement ended.

"This was a classic case of identifying an ideally located property that was not taking best advantage of that location," says Jonathan P. Garrity, who manages the Industrial Partners fund. "We knew that when the corporate owner vacated, we could pursue the very robust port-related market demand."

Recently, Mr. Garrity consummated a lease providing 162,000 square feet for one of the nation's largest logistics support companies, which has a long-term contract with the U.S. Navy. The tenant, Alutiiq LLC, a subsidiary of Afognak Native Corp., an Alaska Native corporation formed under the Alaska Native Claims Settlement Act, serves the Navy from more than 100 locations worldwide.

"The Industrial Partners property in Charleston is part of that vital network now," says Mr. Garrity, who adds that a second major lease with a different company involved with U.S. Customs may be signed in the next few weeks.

"With the property advantageously leased to essentially recession-proof businesses, we'll be in a position to finance the facility and reinvest in further improvements," he says. "Our investors can receive a healthy current return while enjoying the prospect of future capital appreciation." Anthony Malkin says the proactive deal-making strategy in Charleston "represents the same disciplined approach we take in managing our office, retail and multi-family properties. The industrial fund is following the traditional Wien & Malkin path: find unrealized potential value, purchase under terms that make good economic sense, then redevelop and reposition to extract the value."

He notes that the warehouse/distribution marketplace has not seen the excessive price inflation that has characterized the office and retail markets, and therefore still offers good value opportunities.

"In fact, we're seeing indications that current credit-market conditions may be creating additional buying opportunities for this type of property," he says. "Jonathan has identified several possible acquisitions that are under scrutiny at this time."

To date, the fund has acquired seven properties in five states.