Heartland Express has completed a sale-leaseback agreement for its transportation facility in Rancho Cucamonga, California, to take advantage of the booming Inland Empire real estate market, according to CFO Chris Strain. On May 23, Heartland completed the sale of the 8566 Pecan Ave. property to Realterm, a property manager specialized in the transportation industry. According to an SEC filing, it estimates a $73 million pre-tax gain on the sale of the property. “We didn’t want to sell at first, but the price kept getting better and better,” Strain explained.

According to a Realterm news release, the 26,800-square-foot fleet repair facility has 22 loading bays and is one of the largest in the region. It is less than nine miles from a Union Pacific Intermodal terminal and six miles from Ontario International Airport. The leasing agreement between Heartland and the location has a two-year base term and a five-year renewal option.

Heartland no longer leases terminals; according to its annual report, the carrier owns all 25 terminal facilities it operated at the end of 2021.

“We handle our terminals in the same way we approach our real estate,” Strain said, adding that selling the Rancho Cucamonga terminal “was a one-of-a-kind situation.”

As corporations try to grow their footprint in the important, port-adjacent market, the price appears to have been justified for Realterm. According to CBRE, the vacancy rate in the Inland Empire plummeted to 0.3 percent in Q1 2022, while rents reached new highs.

In a statement, Stephen Panos, managing director and fund manager of Realterm, stated, “The Inland Empire is renowned as one of the most highly sought-after high flow through industrial markets in the country.” “8566 Pecan Avenue is a great addition to our portfolio as a best-in-class fleet repair facility.”

In comparison to Heartland’s real estate activities last year, the Rancho Cucamonga deal was a significant transaction. Property and equipment sales brought in $37.4 million in 2021, including a $4.2 million profit on the sale of a port in an undisclosed location.

Although Heartland does not foresee any more terminal sales, Strain does not rule out the possibility. Market conditions and the identity of a potential buyer would factor into such a decision, according to Strain.

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