Agellan: McIntosh Between Trailing NOI and the Re-Leasing Reality

The main article argued that Agellan bought time at the financing layer, but did not remove the asset-level stress points that will define 2026 quality. McIntosh deserves a separate continuation because this is the property where trailing 2025 numbers still look strong, while the year-end valuation is already reading a very different reality.

The gap is sharp. In the annual property table, McIntosh exits 2025 with $7.048 million of NOI, 92.27% average occupancy, and total value of $122.7 million. But the year-end appraisal already describes a building that is only 69.1% leased, with a 2.45-year WALT, and a model that assumes 60% average occupancy in year one and only $2.505 million of NOI. In other words, the historical NOI is still sitting in the report, but the valuation is already sitting inside a re-leasing case.

That is what makes McIntosh such an important asset. It is large enough to influence the read of the whole portfolio, and it sits exactly on the line between value that still looks fine in the annual report and value that now has to be judged through what actually happens in 2026.

Four points matter right away:

• The historical number and the economic number are no longer telling the same story. $7.048 million of 2025 NOI looks solid, but the valuation model already drops to $2.505 million of year-one NOI and only $0.5 million of cash flow before debt service.
• The value decline is not mainly a cap-rate story. As-Is value fell from $120.0 million in YE 2024 to $114.4 million in YE 2025 while the cap rate stayed at 6.50%. What broke here was the leasing condition.
• Concentration moved from a theoretical risk to an operating event. In the annual report, United Natural Foods is shown as the tenant responsible for 72% of the tenant-attributed space. In the appraisal, it still occupies two lease lines totaling 475,381 square feet, 51.1% of the building.
• The excess land adds optionality, not operating support. The asset includes 13.656 acres of excess land worth $8.3 million, and that land is not pledged to the new blanket loan. That matters, but as of year-end 2025 the development plan there was still only at an early permitting stage.

The Gap Between the 2025 Report and the Year-End Valuation

To read McIntosh correctly, one has to stop reading it as a $7 million NOI asset and start reading it as an asset in transition. The annual report still presents a year in which net revenue rose to $10.038 million, NOI rose to $7.048 million, and the property spent most of the year at high average occupancy. But the appraisal is already pricing a year-end condition in which two facts have changed the angle completely: Alberts Organics left in September 2025 and did not renew, and United Natural Foods gave notice of an early exit in 2026 instead of 2027.

That is why the right question is no longer "what did McIntosh earn in 2025," but "what remains after the heavy tenants started moving." The appraiser’s YE 2024 to YE 2025 comparison table makes that transition explicit: physical occupancy falls from 100% to 69.1%, NOI per square foot falls from $6.36 to $3.63, and As-Is value declines by 4.67%. This is not a violent collapse in value, but it is no longer the read of a stabilized asset.

This chart is the core of the continuation thesis. The appraiser is not valuing a permanently impaired property. It is valuing a temporary valley: a very weak first year, a partial second-year recovery, and a return to higher NOI by year three. Put differently, the year-end value is no longer the value of a steady asset. It is the value of a transition period.

The second chart highlights the easiest analytical mistake. The 92.27% average occupancy for 2025 is not false, but it is no longer the number that governs the economics from here. What matters now is 69.1% current leased occupancy at year-end, and even that is not the full story because the valuation model assumes the first year will average only 60%.

The Asset Has Shifted From an Operating Anchor to a Re-Leasing Test Case

The annual-report tenant table shows just how concentrated McIntosh was before this shift. United Natural Foods appears there as the main tenant, responsible for 72% of the tenant-attributed space, while Access USA holds another 18% through January 2035. This is not a tenant list that provides real diversification. It is a tenant list that creates clear dependence.

The most important detail is not only who the tenant is, but how it leaves. The note in the annual report says that in December 2025, United Natural Foods notified the company that it intended to end the lease in July 2026 rather than July 2027, while continuing to pay rent through July 2027. That distinction matters. Contractually, some rent tail remains. Operationally, the space has to be re-let much earlier.

The appraisal shows how that gap becomes economic reality. The rent roll already lists only 642,550 square feet leased out of 930,132 square feet, meaning 287,582 square feet vacant. Of the leased space, Access USA holds 167,169 square feet through 2035, while the two United Natural Foods lines, one dry and one cold, both run only through July 31, 2026. The appraiser states directly that the property is not at stabilized occupancy and that the expiration pattern is atypical.

The key point is that contractual tail does not equal operating stability. The company may still collect rent from United Natural Foods through July 2027, but the property is already in a situation where the central question is how fast and at what economics the vacated space can be refilled. That is exactly why the signed-lease revenue table looks like it does: $5.062 million for 2026, but only $1.827 million for 2027. That number explains why McIntosh can no longer be read simply through the prior year’s NOI.

What Is Already Embedded in Value, and What Still Depends on Assumptions

There are two easy mistakes here, and each is dangerous in a different direction. The first is to say that the $114.4 million value already reflects everything, so there is little left to worry about. The second is to say that this is just the start of a collapse, so the value is not meaningful. Both are too simple.

What is already embedded? First, the leasing damage is already in the number. The appraiser’s Value Comparison Table shows clearly that the major change between YE 2024 and YE 2025 is not the cap rate, which stayed at 6.50%, but the occupancy, the NOI per square foot, and the question of whether the asset is stabilized at all. The discount rate did move up to 8.25% from 8.00%, but that is only a 25-basis-point move. It is not the main story.

This chart matters because it blocks a common misread. McIntosh did not mainly de-rate because the market suddenly demanded a harsher cap rate. It de-rated because the property stopped being full and stabilized.

But what still depends on assumptions? This is where the picture becomes less comfortable. The DCF model assumes market rent of $8.00 per square foot for dry industrial space and $13.50 per square foot for cold-storage space, with 3.5% annual rent growth, 75% renewal probability, two months of free rent, and four months of downtime. It also assumes 6% leasing commissions on new deals, 3% on renewals, and $1.50 per square foot of TI on new leases.

That means the valuation has already absorbed the tenant exits and the transition period, but it is not pricing a "nobody comes" case. Quite the opposite. It still assumes the space can be re-let, and for part of the space at rent levels materially above current in-place contracts. The clearest example is the cold-storage block: in the appraisal, United Natural Foods pays $7.32 per square foot there, while the market-leasing assumption is $13.50 per square foot. That spread tells you where the upside sits, and where the risk sits too.

So the $114.4 million value is not a floor. But it is also not fantasy. It is an in-between case: the pain is already in the number, but the recovery still lives on paper.

The Excess Land: A Real Option, But Not Yet the Core of the Thesis

The second angle that justifies a standalone continuation is the land. McIntosh is not just a large industrial building. It also includes 13.656 acres of excess land, or 594,857 square feet, which the appraiser values separately at $8.3 million. The company says it is pursuing approvals to build two additional industrial buildings totaling about 190 thousand square feet, while also stating clearly that there is no certainty the project will actually proceed.

The more interesting detail appears in the property financing disclosure. In July 2025, when the new blanket loan was taken, the building and the land were separated, and only the building was pledged. The loan amount allocated to McIntosh is $83.641 million, it is non-recourse, and it is secured by a first-ranking mortgage on the property company’s rights in the building. The land itself sits outside that pledge.

This is exactly where McIntosh picks up an optionality layer that is not merely accounting-based. If approvals advance, and if the company chooses to sell, finance, or develop, the unencumbered land could become a separate capital-allocation lever from the existing building. But as of year-end 2025, it is still only an option. There is no approved project yet, no future lease base, and no cash flow that can substitute for the operating problem in the building itself.

That is why the two sentences have to be held together. Yes, there is additional value here that is not fully trapped inside the blanket-loan pledge. No, it cannot yet be used to beautify the 2026 operating story.

Conclusion

McIntosh is no longer just "an asset with $7 million of NOI." As of year-end 2025, it is already a combination of three different layers: a large building that has shifted from stable leasing to a re-leasing test case, a valuation that has already absorbed much of the occupancy deterioration, and excess land that could create capital-allocation optionality but does not yet create cash flow.

That is exactly what makes the asset so important to the Agellan read. If the re-leasing works, the current value could later look relatively conservative because the model already shows NOI recovering after the year-one trough. If it does not, even $114.4 million could prove to be a waystation rather than an end point, because the valuation still depends on clear recovery assumptions.

From here, the checklist is simple: the pace of releasing the vacated space, the gap between achieved rent and the $8.00 dry-space assumption and the $13.50 cold-space assumption, and any real progress in the land option. Until those three things start moving, McIntosh will remain less a stabilized logistics asset and more a test case that helps decide whether Agellan’s 2026 is merely a bridge year, or the start of genuine stabilization.