5816 Kennison Place
Two-Tenant Industrial Outdoor Storage Asset | Corporate Credit - NNN Leases
Marketing description
100% National Tenant Lineup with Robust Corporate Credit Profile
CentiMark & JM Test Systems are leading operators in their respective industries. CentiMark is the largest commercial roofing contractor in the U.S. with a $1+ billion revenue and a 50+ year operating history. JM Test Systems operates nationally with a $100+ million revenue and a 40+ year operating history. Both Tenants offer full corporate credit.
Extensive Building Improvements Recently Complete at Tenants' Expense
CentiMark and JM Test Systems collectively spent hundreds of thousands of dollars, at their own expense, on their respective buildouts. This investment not only enhances residual value for a future owner but also indicates strong tenant commitment & high likelihood that both will wish to remain on site long-term.
Below-Market Rent with Mark-to-Market Opportunity in Year 5
CentiMark & JM Test Systems are currently paying a collective rent of just $9.11 / SF, which is below market for Billings, MT even before considering the value of the outdoor storage space. Similar industrial spaces in Billings without any outdoor storage yard space are currently leasing for $12/SF (Contact Broker for details). Furthermore, both Tenants contributed significant $ to thier own build outs, collectively hundreds of thousands. Since neither Tenant has extension options in their Lease, Landlord has full leverage to set new terms & rent at expiration of the current term, in Year 5.
Mission-Critical “Hub” Location for Both Tenants
Billings is the largest industrial market in a ±400 mile radius and acts as a hub serving this massive geographical region. Both CentiMark and JM Test Systems use Billings as a center of operations in covering this large area, benefiting from the Property’s position just off I-90 to access surrounding markets. Given that both Tenants advertise the ability to service their clients’ needs on a national basis, having a presence in this market is critical for both CentiMark & JM Test Services.
NNN Leases with Annual Rent Increases
Passive NNN leases with 3.00% and 4.00% annual rent increases from CentiMark & JM Test Systems, respectively.
Separate Buildings, Fenced Yards, Drive Lanes & Entrances Mitigate Landlord Management Obligations
All Property elements save for some shared utilities are fully separate, including separate buildings, access drives, yards, etc. Each Tenant manages and maintains their own site offering a much more passive ownership structure compared to most multi-tenant industrial assets. This allows an owner to benefit from multi-tenant diversification while also avoiding the management obligations that typically come with multi-tenant assets.
Potential to Self-Mange for Additional Income
Both Tenants pay a management fee equal to 5.00% of Landlord’s gross annual receipts (including on all rent paid and all OpEx including taxes, CAM, and insurance). Given the passive nature of the Leases there are nominal property management obligations, so current ownership self-manages the asset and retains the ±$8,000 management fee as additional income, which a new owner could continue to do.
Recent 2015 & 2014 Construction & Large 2.40-Acre Lot Enhances Residual Value
Recent construction with 3-buiding layout and large fenced & graveled lot offers strong residual value.
Ongoing Tenant Financial Reporting
Both Tenants report entity-level financials on an ongoing basis.
No State Sales Tax in Montana & Business Friendly Policies
Montana is one of the most tax-efficient and business-friendly states in the country, being one of only five states with no sales tax, plus a low 6.75% corporate income tax rate. The state also provides businesses with an automatic $1 million business equipment tax exemption and consistently ranks highly for business tax climate and economic competitiveness.
Largest City in Montana & High-Growth, Regional Hub
Billings in the largest city in the State of Montana and the largest industrial hub within hundreds of miles, serving a large geographic area including numerous regional markets. Billings' population has grown by double digits each decade since 1990 and has never decreased since record keeping began in 1870.
Investment highlights
Northmarq is pleased to present for sale the two-tenant industrial outdoor storage asset located at 5816 Kennison Place & 5857 - 5865 Stearns Circle in Billings, Montana (“The Property”). The property is comprised of ±15,417 SF across three buildings sitting on ±2.4 acres 100% occupied by two tenantseach with separate buildings, fenced yards, entrances, etc. The Property is leased to CentiMark and JM Test Systems, each offering full corporate credit. Both tenants made significant investments in the Property at their own expense totaling hundreds of thousands of dollars - contact Broker for details. CentiMark is the largest commercial roofing contractor in the U.S. with an annual revenue of $1+ billion and 100+ locations serving every major population and industrial center within the U.S. and Canada. JM Test Systems is a national provider of calibration, testing, and rental services for electrical, mechanical, and instrumentation equipment. The company operates 13+ locations throughout the U.S. along with mobile/on-site service trailers and field teams, boasting impressive financials - contact Broker for NDA & further details. Both Tenants have healthy financials with more info available upon request from broker & upon NDA execution. Both Tenants operate under passive NNN leases with 4+ years of lease term remaining on each. Neither Tenant has any extension options, offering the Landlord full leverage to increase rents or set new lease terms at the expiration of the current leases. CentiMark and JM Test Systems’ annual rents increase by 3.00% and 4.00% annually, respectively. Both Tenants pay a management fee equal to 5.00% of Landlord’s gross annual receipts (including all rent paid and all OpEx including taxes, CAM, and insurance). Given the passive leases, there are nominal property management obligations – current ownership simply selfmanages the asset and retains the ±$8,000 management fee as additional income, which a new owner could continue to do (not included as part of NOI advertised herein). Billings is the largest city in Montana and the most active industrial hub within a 400+ mile radius. Both CentiMark and JM Test Systems use the Property as a base of operations to serve a large regional customer base, making this location mission critical for both Tenants. The Property’s positioning within Billings just off I-90 allows for easy access to both Billings and all surrounding regional markets. Furthermore, the Property is in the path of growth within Billings, surrounded by new residential construction on multiple sides. Population within 1 mile of the Property has increased by 2.60% annually over the past 5 years and continues to increase nearly 1.00% annually.
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