Whirlwind Pitch Begins for $100M-Plus Industrial Portfolio

DALLAS-A 1.7-million-sf industrial portfolio of Dallas-only product, valued at more than $100 million, is being paraded in front of investment circles in a three-week courtship before the final call sounds. It’s the next big play for a team that’s just come off a double sale that rolled $480.1 million into Rreef’s till.

In bringing the 55-property package to market, Charter Holdings Inc. has rolled out this year’s largest Dallas-only industrial listing, Randy Baird, senior vice president in Dallas for CB Richard Ellis Inc., tells GlobeSt.com. Led by Ray Washburne, the Dallas-based Charter bundled a 75%-leased package in a “take one or all” play. “We will consider a partial sale for those who have less than $100 million of loose change,” Baird says.

The no minimum-ask offering runs the gamut from class A service center product in Richardson’s Telecom Corridor to older distribution structures in the Brookhollow Industrial Park. The 55 buildings, averaging 12 years old, make up 18 projects crisscrossing the metroplex. Nine are single-tenant structures while the largest is the 21-building Arapaho Business Center with 476,097 sf of office service center space.

The 180-tenant roster includes national names like Neiman Marcus Group. EI DuPont & Co. and UT Southwestern Medical Center as well as local and regional companies. “It’s a good rollover schedule,” Baird says. “What’s important is the buildings are so well suited for their respective submarkets.” And, only one property has a small amount of assumable debt, he says.

Baird’s predicting a high volume of offers due to the package’s diversification and the deepening interest in industrial product by the nation’s newest sector of buyers, TICs and well-capitalized private REITs. He says the appetite for industrial product is fueled by the stability of the asset class and lower cost for rollovers.

The Dallas debut closely trails a double sale for Rreef by the CBRE team, led by Jack Fraker and Darla Longo, executive vice presidents in Dallas and Ontario, CA, respectively. Besides Baird, the powerbroker team includes Barbara Emmons, a senior vice president in Glendale, CA, and John Robinson, a first vice president in Dallas.

Baird says Rreef’s two class A portfolios attracted scores of offers from predominately US-funded institutional circles. The winners were Denver-based Dividend Capital Trust, which got 4.9 million sf in six cities, and Teachers Insurance Annuity Association, which picked up 3.1 million sf in seven cities. The closings, taking place in the same week, had TIAA collecting from the sale to Dividend Capital as a JV partner with Rreef and buying one of the San Francisco adviser’s wholly owned portfolios.

TIAA spent $246.1 million for the Rreef America Industrial Portfolio, a 93%-leased package of 80 bulk distribution and warehouse buildings in Boston, Chicago, Los Angeles, Phoenix, San Francisco, Seattle and Wilmington, DE.

Dividend Capital, paying $234 million for the Rreef National Industrial Portfolio, got 57 bulk distribution and light industrial buildings with an 84% occupancy. The Phoenix and Atlanta components each had about 1.3 million sf, Dallas, 940,000 sf; Houston, 806,000 sf; Boston, 406,000 sf; and San Francisco, 134,000 sf.

“Both (portfolios) are really multi-tenant buildings…with no real rollover exposure in any given year or with any certain tenant,” Baird says. The buildings ranged from fours years old to about 20 years old.

TIAA, though, possibly got the sweet spot of the Rreef sell-off. The Rreef America package was concentrated in the nation’s hottest industrial region, Los Angeles, where vacancy is just 6% in an 895-million-sf inventory. The Pacific component, with three L.A. submarkets, fetched $88.8 million for 46 buildings, totaling 920,028 sf. The structures, built between 1973 and 1993, were 99% leased to 90 tenants.

In comparison, TIAA paid $59.1 million for 15 buildings, totaling 741,456 sf, in Oakland, CA; $33.1 million for a pair of buildings, with 384,000 sf, in Boston; $23.7 million for 10 structures, totaling 612,756 sf, in Chicago; $19.4 million for a 312,231-sf trio in Seattle; $16.5 million for three structures, with 266,141 sf, in Wilmington; and $5.5 million for a 136,704-sf building in Phoenix.