Case Study: Smithfield Foods – Greenfield, IN
Guaranteed absolute net lease
Avg. annual net cash return
Property: 419,000 s.f. distribution center and headquarters under a long-term sale/leaseback with Smithfield Foods. Guaranteed 20 year initial lease term with additional options and expansion rights.
Tenant: Smithfield Foods is the largest producer of pork products in the world, and with a strong focus on customer service, they began looking at ways they could service their customers better than ever before.
Market: Located in Greenfield, IN, along I-70 on the east side of Indianapolis, the “Crossroads of America”. The location allows Smithfield to distribute to the Mid-West and Northeast, as well as accessing their production facilities, within 1-2 days drive time.
Economics: Purchased at a 6.2% capitalization rate in a sale/leaseback transaction; acquisition was based on Smithfield’s cost of construction with no developer mark-up, enabling the tenant to lower its occupancy cost. Investors are receiving an average annual net cash-on-cash return of approximately 8% over the lease term.