'When leasing activity slows is when I’ll start to worry': Q&A with CanTex Capital CEO
DALLAS, June 3, 2020 – Q&A with CanTex Capital CEO
By Ryan Salchert, Staff Writer, Dallas Business Journal, June 3, 2020
While some companies have begun to shift their investment criteria due to the COVID-19 pandemic, one Dallas-based firm has stayed focused on one asset class in particular: infill light industrial.
CanTex Capital, which was formed three years ago, has quietly amassed a local portfolio of more than 1 million square feet and has become particularly aggressive as of late. The company has closed on almost 10 properties this year, including some during shelter-inplace orders, and have ambitions of eventually becoming the largest non-institutional owners in Dallas's Brookhollow Industrial Park.
Following the company's recent closing of a two-building, 124,658-square-foot industrial portfolio in Fort Worth, the Dallas Business Journal spoke with CEO and Principal Romy Cheema about the company's recent investment activity, favorite submarkets and how the market is moving forward.
Tell me about your company and your recent investment activity.
We started CanTex about three years ago and our main focus is Class B, value-add light industrial, infill-type product. We focus just on Dallas-Fort Worth and think there's no better place to invest in commercial real estate. We see a lot of runway in light industrial and believe in it whole hardily.
We've become very aggressive in the last two years and recently closed on our eighth or ninth property of the year. Our last deal in Fort Worth was getting done in the middle of the pandemic, and while we initially thought, 'Should we really be closing,' we've seen fantastic leasing velocity in that area which gave us confidence.
What are your overall thoughts about the investment market right now?
We are positive on our asset type and on DFW. If I’m looking at retail, it’s completely different. Hospitality is a different animal, too. Infill industrial, last-mile type stuff, we're still very bullish on. Industrial was already strong and coming out of this. I think it’ll be even stronger. Our locations are super core. A lot of our product has a semi-retail component, which is a big thing we look at.
Though there's still a lot of uncertainty and probably will continue to be throughout the third and fourth quarter, we think DFW is the place to be. Everyone is looking for opportunities and big discounts. Where’s the big price drop? We’ve seen trickles of it, but no big moves yet. It may be due to a discrepancy that exists between buyers and sellers.
What submarkets are you really attracted to?
Brookhollow (Industrial Park). That’s our giant star with an asterisks next to it and a circle around it. We want to be one of the largest non-institutional owners there and are working hard on that. We love that market. The location is so prime and core, and it gets a lot of attention because of that. There has also been a pretty drastic increase in prices and rental rates, too. Other areas we like are the Great Southwest, that Arlington and Grand Prairie area, and Fort Worth.
Leasing activity was fantastic before all this and we were concerned about COVID causing a slowdown there, but so far we're ahead of schedule on lease up underwriting. We closed on a building in February and leased it up in three weeks. We had another in Brookhollow that struck above pro-forma and beat its lease-up time during all this. Tenants are there, and that submarket is still booming. When leasing activity slows is when I’ll start to worry.
This interview is edited for brevity and clarity.