Wall Street Journal: Investment Firm Sells Industrial Property Portfolio for $1.07 Billion
From the Wall Street Journal:
An investment firm that specializes in industrial real estate has sold a $1.07 billion collection of smaller urban industrial properties, tapping into investors’ desire for property tied to online retail.
DRA Advisors LLC, a New York-based private-equity firm that specializes in real estate, purchased the portfolio that includes 19.8 million square feet of industrial space spread across 21 U.S. markets including Dallas, Chicago and Atlanta.
The seller, Boston-based Cabot Properties Inc., had been assembling the portfolio since 2005, said Franz Colloredo-Mansfeld, Cabot’s chief executive, in a statement announcing the deal.
The portfolio Cabot sold to DRA consisted of urban properties with an average size of about 110,000 square feet. These property types—often known as “infill”—have generally sold at higher capitalization rates than bigger facilities because they tend to be older and populated with smaller tenants.
But the difference in price has been narrowing. Today infill properties trade at about one percentage point above larger, more modern facilities, according to Eric Frankel, analyst at real-estate research and consulting firm Green Street Advisors. He estimated the spread three to four years ago was between 1.5 and two percentage points.
Cabot’s ability to sell the entire portfolio in one deal “is significant in itself,” said Mr. Frankel. “Four years ago, this probably wouldn’t have traded. The spread would have been too wide, or the seller would have said: ‘No, I’ll just break it up and sell it in pieces.’”
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