2M-SF Nevada Industrial Portfolio Comes to Market

LAS VEGAS-Panattoni is selling seven class A industrial buildings totaling 2.02 million sf in Reno and Las Vegas in order to recycle the capital. The Sacramento, CA-based real estate company has retained CB Richard Ellis to market the portfolio for sale to one buyer or in a couple of different pieces to multiple buyers.

One of the brokers in the deal, CBRE’s investment properties director Rebecca Perlmutter Finkel tells GlobeSt.com that the portfolio has been attracting the interest of institutional buyers looking for core properties. “The buildings are well-built, well located distribution operations with quality tenants,” says Finkel, who is working the listing with lead brokers Jack Fraker and Darla Longo, and several others. A call for offers is expected in late August. The sale is expected to be completed by the end of the year.

All of the buildings were built between 2005 and 2008. Approximately 70% of the portfolio’s square footage is located in the Lear Industrial Center, which sits within the Cheyenne Industrial Center in Reno, NV. The portfolio also includes one 337,000-sf building in Fernley, NV, which is east of Reno, and two buildings totaling 267,500 sf in the Cheyenne Industrial Center in Las Vegas.

Portfolio occupancy is currently 82%. Two partially leased buildings within Lear Industrial Center hold all of the available space. Investment grade tenants include K2 Inc. (owned by Jarden Corp.), with 202,000 sf; Urban Outfitters, with 175,000 sf; Cardinal Health Inc., with 88,000 sf; and Wacker Neuson Corp., with 56,550 sf. The average lease term of the credit tenants just less than 7 years. Other publicly traded tenants include Trex Company Inc., which occupies the building in Fernley.

Leases representing a little less than 10% of the building’s total square footage are set to expire in 2009. No lease expirations are scheduled for 2010. From the beginning of 2011 through 2013, leases representing 35% of the building are set to expire. Warehouse vacancy in Reno is approximately 10% thanks to a fair amount of new construction in that market. Warehouse vacancy in Las Vegas is in the mid-single digits.

The pro forma NOI for 2009, which assumes 95% occupancy, is $7.9 million. Pro Forma NOI for 2011, which assumes 99% occupancy, is $8.53 million. If acquired at a 6% cap rate based on 2009 pro forma NOI, the sale price would be approximately $130 million, or $64.35 per sf. There is no assumable debt as part of the deal.

CBRE brokers Josh McAtor, Barbara Emmons, Conor Feeney, Donna Alderson, Greg Tassi, Gordon Zack and Mike Nevis are the other members of the listing/marketing team for the portfolio.