American Furniture Manufacturing - Mississippi
Ecru, MS 38841
The American Furniture Manufacturers industrial net leased asset in Pontotoc, Mississippi represents a premier opportunity for an investor to acquire a strategically located property in a market that is critical for its long term tenant, American Furniture Manufacturers (AFM). The approximately 1,036,400 square foot property was built to suit for AFM in 1998 and over the past 15 years the property has continually been expanded and rebuilt to meet the growing demands for the goods provided by the tenant. The property is the definition of a “Mission Critical Facility”. It is AFM’s sole location and serves as the company’s headquarters, manufacturing facility and warehouse/distribution hub. With 12+ years remaining on the initial, 20 year term, the AFM facility represents a rare, long term, Absolute Net leased investment sponsored by a publicly traded company, Compass Diversified Holdings, LLC (NYSE: CODI), who secured a majority stake in AFM by way of a $92.5 Million acquisition in 2007. The asset also has desirable annual CPI increases of up to two and one-half percent (2.5%) which continue through the two (2) 10-Year renewal options, maximizing the opportunity for return upon exit. By taking advantage of current debt environment coupled with a current CAP rate of 9.05% investors have the chance to leverage a year one return of 16.84%.
The project is strategically located just east of Tupelo in the heart North Mississippi’s furniture manufacturing corridor. Placement in this market ensures the long term access to the highly skilled labor force necessary to produce the quality goods for which the company has become known throughout the industry. In 2010 the State of Mississippi instated a $2,000 jobs tax credit is available for Mississippi furniture manufacturers for new, full-time cut-and-sew workers, which was recently extended through 2017. In addition to the socioeconomic factors that would make leaving the area relatively cost ineffective, the company has invested a significant amount of capital in the facility over the years. Most recently, it spent ~$9 Million reconstructing approximately 540,000 square feet of the facility.
- 12+ Years Remaining on Initial 20 Year Term
- Two, 10-Year Options to Renew
- Year One Cash-on-Cash: 12.95%
- Year One Total Return: 16.84%
- Annual CPI Increases of up to 2.5%
- Strategically Located within Unique Specialized Industrial Market
- 3rd Quarter Net Sales up 26.7% Year over Year
- Parent Company, Compass Diversified Holdings, LLC (NYSE: CODI) Rated “Ba3” (Moody’s)
- CODI Acquired Majority Interest of AFM in 2007
Net Rentable Area
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- A premier opportunity for an investor to acquire a strategically located property in a market that is critical for its long term tenant, American Furniture Manufacturers (AFM).
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