Dana Incorporated Case Study: Creating Value Through Creativity
In REIT portfolio management, dispositions can be just as important as acquisitions. The Modiv team took a disciplined and data-driven approach to find the best possible solution when they were faced with a vacated property with years left on the lease term.
Located within the Austin, TX MSA, an R&D/Flex industrial building was purchased in December 2016 for $9.1M. The 45,756 sq. ft. building was leased to Dana Incorporated (“Dana”), a leading supplier of fully integrated drivetrain and electrified propulsion systems for passenger vehicles.
Due to a change in business direction, Dana decided to vacate the space in 2019 with nearly five years of lease term remaining. Modiv’s management team developed a proactive, asset-level strategic plan to opportunistically negotiate an early termination of the lease resulting in continued monthly rent payments through July 2022 (previous lease term was July 2024), generate an early termination fee and control the strategic direction of the property.
Modiv was able to identify a buyer shortly after taking strategic control of the property and sold the property in July 2021 for $10M. In addition to the sale proceeds, Modiv also received the early termination fee as a lump sum and will continue to collect payments from Dana through July 2022.
“Dana is an example of being disciplined and creatively working through a potentially unfavorable situation,” explained Aaron Halfacre, Modiv’s CEO. “It’s also an example of not being afraid of the ‘dreaded empty building’ but instead taking the initiative to figure out how to create value for the company and our investors. We were pragmatic about the market and weren’t afraid to go after the value we knew was out there.”