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Cobalt Lobs $50M Round for 1M SF of Industrial

DALLAS-In a one-month spin, Cobalt Industrial REIT II picks up nine buildings in Atlanta, Dallas, Denver, Minneapolis and St. Louis. Occupancy averages 95%.

By Connie Gore | Updated on July 03, 2008

DALLAS-In a one-month closing spree, Cobalt Industrial REIT II has planted $50 million into acquiring one-million sf in five major metros. The assets, bought from broad mix of sellers, average 95% occupancy in below-market rent scenarios with mostly national and international tenants.

“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.

1011 Royal Lane

“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.

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