Welcome Group expands portfolio
Firm pushes past the 5million-square-foot mark in properties
Houston-based Welcome Group pushed its industrial portfolio past the 5million-square-foot mark in Texas as a result of recent developments and acquisitions, and is looking to expand its footprint.
“We are starting to look in the southeastern United States,” said President and CEO Welcome Wilson Jr.
The portfolio consists of singletenant commercial, distribution, lab and manufacturing properties.
Welcome aims to boost its portfolio to more than 6 million square feet of industrial space by the end of 2021 through additional development, purchase and sale-leaseback opportunities.
The businesses that occupy Welcome’s buildings make products ranging from garden hoses to O-rings formedical devices to subsea umbilical and power cables used in oil and gas projects to engines used for marine propulsion and power generation. Its tenants also include companies in the repair and services business.
“The beauty about manufacturing, it’s where companies make a living and produce something,” Wilson said. “We’ve been very fortunate over the years with manufacturing staying full. We’re 97 percent occupied in spite of the downturn.”
The company dates to the late 1950s when Welcome Wilson Sr.
and his brother Jack E. Wilson started to develop homes in Jamaica Beach on the west side of Galveston.
The 1990s were a period of growth for the firm. Welcome Wilson Sr. joined forces with TCP Realty in purchasing and redeveloping more than 5 million square feet of office and retail buildings in that period, and the company, which also developed hospitality, apartments, office and retail buildings, often in partnership with others, began developing single-tenant industrial buildings in the late 1990s.
That has been the focus of the company for more than 20 years.
It is now among the largest investors in Houston commercial industrial real estate. Other large investors include Prologis, Duke Realty, East Group Properties, Hines, Clay Development & Construction and Texas Development Co.
More recently, Welcome has been growing through sale-leaseback transactions, through which it buys a property fromthe owner/ tenant and then leases it back to them. Such deals enable sellers to convert equity in their real estate into cash while remaining in their facilities. They can use the proceeds to improve their balance sheet, gain working capital or pay down debt.
In a deal that helped put Welcome past the 5 million-squarefoot threshold, it acquired the Swan Products garden hose facility in Waco in a sale-leaseback transaction. BC Construction Group completed a 293,995square-foot expansion that increased the size of the facility to 397,192 square feet last year.
The sale-leaseback tenants typically sign leases for at least five to 10 years, Wilson said. When they leave, filling the buildings with new tenants is not a concern.
“We’ve been very successful in re-tenanting buildings where our tenant has outgrown the building or needed to move for consolidation reasons,” Wilson said. “Because we’re in the construction business aswell, it’s easy to retrofit those buildings for a new use.”
In another notable acquisition, the company purchased a 23-acre site in the Cedar Port industrial park in Chambers County east of Houston for future development.
None of Welcome’s tenants have shut down because of the coronavirus, but some have been impacted by lower oil prices, Wilson said.
Wilson views it as a good time to buy, although “we’re not seeing any bargains out there in the marketplace.”
Welcome owns more than115 industrial buildings in Texas and has developed more than 250 singletenant properties.