(To read more on the industrial market, click here.)
OAK BROOK, IL-Inland American Real Estate Trust Inc., headquartered here, has acquired a 21-property retail portfolio and a 20-property industrial portfolio. Inland Real Estate Acquisitions Inc. purchased the two portfolios for Inland American Real Estate Trust. The 1.5-million-sf retail portfolio was purchased for approximately $256.6 million from "various partnerships" based in Texas, says Mark Youngman, vice president of Inland Real Estate Acquisitions, who negotiated the retail portfolio sale. Youngman said he could not disclose the seller.
The 2.3-million-sf industrial portfolio was purchased from ProLogis in Tennessee, says Joe Cosenza, vice chairman of the Inland Real Estate Group of Cos. Inc. and president of Inland Real Estate Acquisitions Inc. Cosenza, who negotiated the industrial portfolio sale, said he could not disclose the sales price but, according to a SEC filing, the sales price was $56.6 million. Cap rates were not disclosed for either sale.
The Six Pines retail portfolio consists of 21 grocery-anchored properties with the majority anchored by Tom Thumb grocery stores, in addition to some anchored by Kroger, Randall's and Publix grocery stores. Other major tenants are Bank of America, Blockbuster, H & R Block, Edward Jones, Subway and State Farm Insurance. The properties are mainly located in Texas in addition to Florida, Georgia, Kentucky, South Carolina and Tennessee. The portfolio was attractive to Inland because of the size and "hidden value," Youngman says. "It is very advantageous, first of all, to buy a bigger portfolio for economy of scale (and) for better value," Youngman says.
The majority of the properties were constructed between 1994 and 2001, though there was one property that was built around 1970 but was renovated in 1999. The retail portfolio has an overall occupancy rate of 98%. The average lease rate is currently approximately $12.35 per sf, which is "pretty low" considering the assets and locations, Youngman says. The portfolio sold for about $180 per sf "and for newer type of core shopping centers like this, that is a little below average," says Cosenza. There were approximately a dozen bidders for the portfolio and Inland did not have the highest bid but had a good reputation and were known for closing quickly and paying cash. "The competition was pretty fierce," Youngman says.
The industrial portfolio consists of buildings in Tennessee with two buildings in Chattanooga and 18 of the buildings in Memphis. "Most of them you could walk from one building to another," Cosenza says. All but 210,000 sf of the 2.3 million sf portfolio is occupied with an average rent of $2.31 per sf. "For brick or concrete industrial buildings that is a lower number. That is a good number to be at because you have got a chance in the future to possibly increase those," Cosenza says. Major tenants include Electrolux Home Products, Jacobson Warehouse and Wells Lamont.
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