LIBERTY PROPERTY TRUST
This year the Malvern, PA-based Liberty Property Trust made a momentous decision: it would exit
the suburban office market through a series of dispositions, save for a handful of holdings. It would
then use the proceeds from those sales—which CEO, president and chairman Bill Hankowsky
expected would net between $600 million and $800 million—to double down on the industrial
space. To that end, it plans to invest between $400 million and $600 million in new target markets
that are outside of its core Mid-Atlantic footprint, focusing on California and New Jersey. As of June
2018 it has $136 million in acquisitions under its belt and another $258 million under contract.
For some companies this might have been a difficult pivot to make despite the obvious appeal of
industrial right now. Suburban office, after all, is showing signs of a significant comeback. But
Liberty Property has been at this business for a good 46 years and industrial has become part of its
DNA. The REIT has built over the years a diverse portfolio of distribution, light manufacturing, and
R&D facilities in major industrial markets.
This strong foundation has allowed the company to ride with ease the current strong cycle for
industrial assets. “We continue to see a strong pipeline of demand for industrial logistic product
driven by reconfigured logistic networks, last mile needs, and the general uptick in economic activity,” Hankowsky said in the REIT’s second quarter earnings call.
As of June 2018, it owns 503 industrial assets totaling 94.4 million square feet. It’s a new portfolio too, with the average age
being 16 years and an average lease term of seven years. Tenants include Amazon.com, Home Depot, Procter & Gamble and
Ryder Integrated Logistics.
Liberty continues to build out its portfolio. Hankowsky told investors that for the second quarter of 2018 it added over 2. 4 million
square feet for an investment of $260 million via both developmental deliveries and acquisitions. It also started $97 million in new
development. “Our pipeline is now 6. 7 million square feet in 24 projects in 16 markets with a total investment of $764 million, and
a yield of 7.2%,” Hankowsky proudly said.
MAJESTIC REALTY CO.
With a current portfolio of 83 million square feet— a significant portion of that devoted to industrial—Majestic Realty Co. counts itself
as the largest privately-owned industrial developer in the US. Headquartered in Industry, CA, it was founded in 1948 by Edward P.
Roski, Sr., who passed the leadership mantle to his son, son Edward P. Roski, Jr., now the firm’s president and chairman.
Its early years, though, the company was a small player with a regional focus, working strictly as a
broker for the first ten years of its operations. By then it was ready to begin developing and it purchased land from the Union Pacific railroad for build-to-suits in Vernon and the City of Commerce.
Its growth quickly accelerated after that. By 1968 it had formed its own construction company,
Commerce Construction Co., and going on to become one of the leading construction general
contractors in Southern California. By its 20th anniversary in 1968 it had accumulated a 1.3-mil-
lion square foot portfolio. Ten years later it had amassed a 7.5-million square foot portfolio.
Majestic continued its upward trajectory over the years and by the 1980s it had made a name
for itself developing mixed-use industrial parks, at that time a new trend for the industry.
The company went on to develop other uses, such as retail and entertainment facilities but it
continued to build out its industrial holdings. By the 1990s it had purchased and developed land
in Atlanta, Denver, Las Vegas, Salt Lake City, Phoenix and Dallas as well as opened several
regional offices across the US.
Today the company is a major player in these markets. As one example in 2015 it acquired the
2,000-acre Port Grande land site from a subsidiary of Mercedes-Benz in Laredo, Texas, with an eye
to targeting the trade flows between the US and Mexico. The company has developed one building
at the site and is moving forward with plans for another. As another example, it has just opened its
newest office in Phoenix this year, after years of developing successful projects in the market.
“Although we’ve held long-term land positions throughout the greater Phoenix area for several years, our recent completion
of the three-building Majestic Tempe Commerce Center, coupled with plans to activate several other area sites, led us to the
opening of a full-time office here in Phoenix,” said Majestic Realty Co. senior vice president Brett Tremaine.
PRESIDENT, CEO &
Edward Roski Jr.