Stabilized Houston IOS | Hanson Capital

Stabilized Houston IOS

 13065 Fondren Rd,

Houston TX 77035

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Opportunity Summary

Hanson Capital Group is pleased to present 13065 Fondren Road, a 30,000 square foot metal warehouse facility situated on 5.23 acres of land along Beltway 8 in Southwest Houston, Texas. The investment is being acquired at $17 per land square foot, reflecting a basis that is firmly rooted in the underlying land value rather than the improvements, and positions the partnership to benefit from the growing institutional and private equity demand for well-located IOS (Industrial Outdoor Storage) sites in major Sun Belt markets, similar to our IOS Portfolio disposition to Zenith IOS, backed by JP Morgan.

 

The property is 100% leased at acquisition by two tenants on month-to-month agreements generating $25,000 per month on a modified gross basis. By close of escrow, the partnership intends to negotiate five-year NNN lease extensions with both tenants at a combined rate of $30,000 per month, representing $1.00 per square foot NNN. This lease rate will translate to a well above market cap rate which is projected to be a 9 cap going in.  This structured lease extension transforms the asset from a month-to-month income stream into a stabilized, long-term cash flowing investment on day one of ownership, while still leaving meaningful upside embedded in the deal for the next buyer.

 

The $1.00 per square foot NNN lease rate negotiated at close represents a deliberate and strategic decision to prioritize lease term and tenant retention over maximum near-term rent. Prevailing market rents for comparable low-coverage IOS sites in the Southwest Houston corridor are currently ranging from $1.15 to $1.20 per square foot NNN, meaning the five-year leases will be written below market from day one. This below-market structure is not a weakness in the deal but rather the source of its exit optionality, providing the next buyer with a clear and near-term mark-to-market story on a stabilized asset with full tenancy and a known lease expiration schedule.

 

Each five-year lease will be structured with market value renewal options at expiration, ensuring that any continuation of tenancy beyond the initial term is reset to prevailing market conditions. This structure gives the partnership maximum flexibility across a range of hold scenarios. The partnership can execute a near-term disposition in year three to a buyer who underwrites the rent bump at lease expiration, or it can elect to hold through the lease term, collect stabilized cash flow, and capture the full mark-to-market rent growth at renewal.

 

The partnership targets a three to five year hold with a primary exit underwritten at a 6.75% capitalization rate in year three. At that exit, the buyer acquires a fully stabilized IOS asset with known lease expirations, a clear path to $1.15 to $1.20 per square foot NNN at rollover, and a well-located land position along one of Houston’s most critical logistics corridors. The deal is designed to generate strong current cash flow from close while leaving a compelling value creation story on the table for the next group.

Minimum Investment $50,000

Key Information

  • Purchase Price: $4 Million
  • TI/Leasing Budget: $0
  • Equity Required: $1.8 Million
  • Close of Raise: 6/31/26
  • Stabilized Cash on Cash - Institutional Class 7.86
  • Stabilized Cash on Cash - Investor Class 5.50
  • IRR: 18.03%
  • Equity Multiple: 1.57
  • Purchase Yield | Stabilized Yield: 9.00 | 9.00
  • Estimated Loan Term: 5 Years
  • Fixed | Variable Rate: Fixed
  • LTC: 60%
  • Estimated Loan Rate: 6.25%
  • Estimated Hold Period: 2 Years
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Property Details

  • Total Building Size: 30,000 SF
  • Lot Size: 5.23 Acres
  • Market: Houston Texas
  • Freeway Access: Beltway 8, HWY 90
  • Year Built: 1958
  • Construction Type: Prefabricated Steel

Business Plan

Stabilized Houston IOS

13065 Fondren Rd, Houston TX 77035

The business plan for 13065 Fondren Road is intentionally simple and execution-light, which is a feature of the deal rather than a limitation. There is no capital improvement program, no lease-up risk, and no physical repositioning required. The entire value creation strategy is concentrated in a single high-impact transaction executed at or before close of escrow: the negotiation of five-year NNN lease extensions with both existing tenants at a combined rate of $30,000 per month.

The lease negotiation is the business plan. Converting two month-to-month modified gross tenants into five-year NNN occupants at a higher combined rent rate accomplishes several objectives simultaneously. It eliminates near-term rollover risk, transfers operating expense exposure from the landlord to the tenants, increases monthly income by $5,000 per month from day one, and creates a financeable, institutional-quality income stream that substantially expands the buyer pool at exit. Each of these outcomes is achieved without deploying a dollar of capital improvement spend.

The five-year lease term is structured with full market value renewal options at expiration, set to the prevailing $1.15 to $1.20 per square foot NNN range at the time of renewal. By locking tenants at $1.00 per square foot NNN today, the partnership creates a transparent and well-documented rent gap that a future buyer can underwrite with confidence. The embedded mark-to-market opportunity at lease expiration is not speculative as it reflects rents that comparable IOS product in the corridor is achieving right now on new deals.

During the hold period, asset management will be straightforward and low-intensity. With both tenants on NNN leases, operating expenses are passed through directly, limiting the partnership’s ongoing exposure to base-level landlord obligations. The focus of the hold period is maintaining strong tenant relationships, monitoring the Southwest Houston IOS market for comparable transaction activity, and timing the disposition to coincide with favorable capital markets conditions.

The target exit is underwritten in year three at a 6.75% capitalization rate, a level the partnership believes is achievable and conservative relative to where institutional capital has been pricing quality IOS assets in major logistics markets. The exit delivers a well-maintained, fully stabilized land-driven asset with two tenants, a known lease schedule, and a clear NOI growth path to a buyer pool that is expanding as IOS continues to attract dedicated capital from industrial-focused private equity and institutional investors.

Market Analysis

Why Houston IOS

Houston is one of the most active industrial markets in the United States, supported by its position as the nation’s energy capital, a major international port gateway, and a rapidly growing population base that now exceeds seven million people in the greater metro area. The city’s low cost of doing business, absence of state income tax, and extensive highway infrastructure have made it a consistent destination for logistics, distribution, light manufacturing, and trade-oriented businesses that require functional, well-located outdoor and warehouse space along the region’s major arterials.

The Southwest Houston submarket along Beltway 8 is one of the city’s most strategically positioned industrial corridors, providing tenants with direct access to the Sam Houston Tollway and connectivity to every major Houston highway spoke including Highway 59, I-69, Highway 90, and I-10. This location sits at the geographic center of the Houston Metro’s industrial activity, equidistant from the Port of Houston, Bush Intercontinental Airport, and the region’s densest population centers. For businesses that depend on efficient distribution, contractor operations, or equipment-intensive field work, this corridor represents one of the most functional and accessible addresses in the city.

IOS as an asset class has experienced a significant and well-documented re-rating by institutional capital over the past several years. Driven by the growth of infrastructure-intensive industries including logistics, construction, utility services, and equipment rental, demand for functional outdoor storage sites with highway access has materially outpaced supply in virtually every major Sun Belt market. Houston, with its concentration of energy, construction, and distribution-oriented businesses, is among the strongest IOS demand markets in the country. Sites with direct Beltway 8 frontage or access, like 13065 Fondren Road, are among the most sought-after configurations in the submarket.

Supply of true IOS-suitable land along established Houston corridors is increasingly constrained. Beltway 8 frontage sites with meaningful acreage, functional improvements, and existing tenancy represent a small and shrinking subset of the available inventory as the surrounding area continues to densify with retail, multifamily, and mixed-use development. New IOS sites of comparable size and location are difficult to assemble and even more difficult to entitle and improve at a cost basis that pencils relative to current market rents, creating a durable barrier to new supply that protects existing well-located assets.

From a capital markets perspective, stabilized IOS assets in major logistics markets have attracted a growing and competitive buyer pool that includes dedicated IOS-focused funds, industrial REITs, and private equity platforms that have identified the asset class as a high-conviction allocation target. Capitalization rates for stabilized, well-located IOS product in markets like Houston have firmed considerably as more capital chases a limited supply of quality deals. The partnership’s exit underwriting at a 6.75% capitalization rate reflects a measured and supportable assumption that leaves room for continued cap rate compression while delivering strong returns to investors at a clearly defined and near-term disposition timeline.

Location

Stabilized Houston IOS

13065 Fondren Rd, Houston Texas 77035

Why Fondren Rd Makes Sense

  • Clear Upside: Newly signed lease is 10-15% below market
  • Infill Location: Strong SW Houston Location
  • Attractive Bay Sizes: Rare low coverage site
  • Strong In-Place Cash Flow: Acquiring a 9 cap on in-place income.

Returns Overview

Underwriting Assumptions

  • Replacement Rental Rate: $1.00/SF NNN
  • Vacancy Timing Upon Lease Expiration: N/A
  • Exit Cap Rate: 6.75
  • Sale Price: $26.5/LSF
  • Deal Time Horizon: 3 Year

Partnership Structure

Distributions and Fees

  • Monthly distributions of operating profits
  • 2.0% acquisition fee
  • 1% asset management fee on Equity Raised
  • 1% disposition fee

Institutional Class

  • Preferred Return of 8% on all cash flow until 8% annualized return is realized.
  • 100% of distributions following the satisfaction of the 8% preferred return will be paid to the General Partner as a “Catch Up” until the General Partner has received an amount equal 2.67% of the aggregate distributions
  • Equity partner with 70/30 split of profits beyond satisfying the 8% Preferred Return and General Partner Catch Up. General Partner will receive a 30% carried interest in the net profits, with the remaining 70% of net profits to be distributed to the Limited Partners
  • Waterfall structure as follows:
  • Investor Preferred Return – 8%
  • General Partner Catch up – 2.67%
  • Pre 13% IRR Hurdle Investor/General Partner Distribution Ratio – 70/30 split
  • Post 13% IRR hurdle Investor/General Partner Distribution Ratio – 60/40 split

Investor Class

  • Equity partner with 70/30 split of profits. General Partner will receive a 30% carried interest in the net profits, with the remaining 70% of net profits to be distributed to the Limited Partners
  • Waterfall structure as follows:
  • Pre 13% IRR Hurdle Investor/General Partner Distribution Ratio – 70/30 split
  • Post 13% IRR hurdle Investor/General Partner Distribution Ratio – 60/40 split

Company Overview

Stabilized Houston IOS

13065 Fondren Rd, Houston Texas 77035

At Hanson Capital Group, experience is not just a metric—it’s our foundation. Boasting over 100 years of combined expertise in real estate, we’ve cultivated a reputation for excellence and strategic insight in the market. Our formidable investments, nearing $350,000,000 under management, are a testament to our sustained success. Driving our vision forward is a harmonized team of executives and directors. CEO Chris Hanson, COO Zach Price, Managing Director of Acquisitions Chris Pike, and Managing Director of Asset Management Jim Tainter lead the charge. Together, they craft the trajectory for Hanson Capital Group, ensuring we remain at the forefront of the real estate industry.

Established in 2008, Hanson Capital Group embarked on its mission to become a trusted auction bidding service provider and create a lasting enterprise focused on creating wealth for ourselves and our partners. Aligning with prominent institutions, our dedication and energy quickly became evident, resulting in the acquisition of over 1,500 single-family homes out of foreclosure within an impressive six-year span. However, our sights were set higher. Identifying a unique opportunity to elevate our bidding pursuits, Hanson Capital, LLC was established in 2010 as a state-licensed mortgage bank. Today, Hanson Capital thrives as a leading hard money and bridge debt lender, and, to date, has overseen transactions exceeding $500 million, while consistently maintaining an equity portfolio averaging $40 million.

While our initial investments were rooted in real estate backed lending, in 2010 we began our pursuit of direct investment in value-add multifamily assets. After nearly a decade of that value-add multifamily strategy, and after buying and selling a few thousand apartment doors, our focus shifted in 2018 towards industrial real estate, which continues to be the focus today.

We are now deeply entrenched in industrial real estate within the so-called “Sun Belt”, with a notable presence in strategic areas like California, Arizona, and Texas. The result of this commitment is roughly $350,000,000 in assets under management and over 1.6 million square feet.

Our process is invaluable to our success. All investment decisions are made by our investment committee in accordance with our Investment Policy Statement (IPS). Strategically crafted, the IPS emphasizes our central mission: capitalizing on inefficiencies in real estate to provide sustainable returns through proven and disciplined investment and management strategies. Every facet of the IPS has been intricately designed to demystify our methodologies, underscoring our commitment to transparency, accountability, and the responsible management of entrusted capital. The IPS also guides us in making informed, consistent decisions, helping to mitigate risks, and optimize returns, while ensuring that our actions align with our long-term investment objectives.

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Chris Hanson

Founder

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