"It's been the most active month that we've had in terms of transactions," says Lewis D. Friedland, managing partner of Dallas-based Cobalt Capital Partners LP. "We anticipate the rest of the year will be fairly active in this deal size." The REIT's sweet spot is 100,000 sf and an average payout of $8.5 million per deed.
Friedland says the deals constituted marketed and off-market transactions with sellers that included Boston-based TA Associates Inc., Wilton, CT-based CommonFund Realty and Bandera Ventures Ltd. of Dallas in addition to one large public industrial REIT and one international company. GlobeSt.com did come across two sales this month: 1135 W. Trinity Mills Rd., 2425 Carter Dr. and 1011 Royal Lane. He tells GlobeSt.com that the buying round also bagged the 278,300-sf Trane distribution center in St. Louis; 199,300-sf GE Northwest Atlanta center in Atlanta; 96,000-sf Aspen distribution center in Minneapolis; and a 78,787-sf building at 1550 Evans St. in Denver.
[IMGCAP(2)]"We bought these buildings on very attractive yields and cost per sf," Friedland says, adding upside lies in rent increases down the road as leases roll in the nine buildings. In-place rents range from $3 per sf to $6 per sf for a 30-plus tenant roster, which is predicted to average 15% to 20% roll per year.
"Although the overall economy is slowing, we're still seeing rental rate increases," Friedland says. Leases average 30,000 sf, with three to seven years left on their terms.
The heavy lifting for leasing and management in respective markets has been handed to local brokers, according to Friedland. Cobalt's point men for the deals were Tom Fishman, managing director of acquisitions, and David Broome, associate director.
Friedland says the six transactions closed with cash, but debt is now being arranged. "Even in today's market, we're able to get very attractive rates due to the high number of tenants and diversification of the tenant base," he explains.Since late August 2007, Cobalt Industrial REIT II has bought about 10-million sf with its $410 million of equity. Friedland says about 60% has been invested. By year's end, he expects 75% to 80% of the till will be spent.
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