(Read more on the industrial market.)
DALLAS-Before the week's out, CB Richard Ellis' powerhouse broker Jack Fraker and his team will unleash an 8.34-million-sf industrial portfolio to investors already circling for the opening play. The 89-property Rreef America industrial portfolio spans 12 major metros, all infill sites and mostly national tenants with long leases.
The class A portfolio is the result of five years of piecemeal buying. In looking at its entire portfolio, the industrial component was heavily weighted so the San Francisco-based giant decided it needed to part with some deeds. "It's mostly a balancing effort," Fraker tells GlobeSt.com. "They're going to maintain positions in all these cities. They like the fundamentals in all these cities."
The bait for the soon-to-start marketing is the portfolio will surpass $48 million of annual net operating income in one, maybe two, years, according to CBRE's vice chairman. That hard fact and the portfolio's diversification in locations, tenants and lease expirations will set the stage for a portfolio buyer and not a series of one-offs or cluster buys, he explains. "That national diversification is going to help us sell this deal," he stresses. To keep its options open, Rreef will be looking at city-by-city offers as well as lock, stock and barrel buyers. The call for offers is July 11.
The portfolio breakdown and occupancies are listed below this story, but some of the crown jewels are the 183,790-sf, 97%-leased Broward Business Park in Fort Lauderdale, FL and Chicago Park Plastics Corp.'s warehouse at 12359 S. Burley Ave. in Chicago, just a piece of that city's 1.8-million-sf component, which is 99% leased. The 280-tenant roster includes Bunzl USA Inc. of St. Louis, Deerfield, IL-based Walgreens Co., Reston, VA-headquartered Sprint Nextel Corp. and Iron Mountain Corp. of Boston.
The portfolio, offered on a free-and-clear basis, averages 86% occupancy for buildings averaging 17 years old. The majority of leases are 10- to 15-year terms, with 10% to 15% rollover in the coming year. About 90% of the industrial assets are positioned in established business parks in major metro areas key to the nation's port-fueled supply chain. "All were built by nationally recognized developers and owned by US institutions since they were born," Fraker says.
The sweet spot is the portfolio has limited exposure to an economic downturn because its pieces are spread across so many markets. Likewise, the average tenant size of 25,000 sf and buildings from 25,000 sf to 550,000 sf will be strong selling points. "That's not a property size that's being significantly overbuilt," Fraker points out. "Look at what's being built, they're behemoths."
Fraker's CBRE team includes executive vice president Randy Baird, vice president Josh McArtor and associate Conor Feeney. Additional support will come from CBRE's top investment sales teams in the portfolio's respective cities.
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