DENVER-Locally based DCT Industrial Trust Inc. has acquired nine properties in the Southern California area with a total value of $79.5 million. The buildings are being acquired in three transactions, including one for the controlling interests in five distribution facilities, a second for three cross-dock truck terminals and a third for a single bulk distribution building.
The purchase price reflects an average $57.50 per square foot value for the distribution buildings and approximately $126,900 per door value for the truck terminals. The combined purchase price is approximately 15% to 20% below estimated replacement cost.
The first year cash yield is expected to average 7.5% with the buildings 97.5% leased at acquisition. The in-place rents for the truck terminals are approximately 30% to 40% below estimated current market rents for similar facilities, according to a prepared statement.
“We are excited to add such high-quality and well-located buildings to our portfolio,” explains Phil Hawkins, president and CEO of DCT Industrial. “Growing our presence in Southern California is a strategic priority for DCT because of the market's size, distribution volumes and supply constraints.”
In one transaction, DCT Industrial is acquiring five facilities comprising 818,029 square feet located in the Inland Empire West and East submarkets. The well-located, highly-functional facilities were developed between 1999 and 2006. The Inland Empire West locations comprise three buildings totaling 626,735 square feet and the Inland Empire East locations comprise two buildings totaling 191,294 square feet. The acquisition of the Inland Empire West properties has closed and the closing of the Inland Empire East assets is expected to occur by the end of January 2011 subject to normal and customary closing conditions.
DCT Industrial acquired a 48.3% controlling interest in these assets for $22.3 million. The interests acquired had been owned by an unrelated third party. Jeff Phelan, DCT Industrial’s president of development and managing director for Southern California, had an existing ownership interest in these assets which has been retained. DCT Industrial will consolidate the $46.3 million of real estate and $13.3 million of assumed mortgage debt.
In a second transaction, DCT Industrial acquired three cross-dock truck terminals encompassing 233 dock doors and located on 24.5 acres. The truck terminals are located in high-demand, in-fill locations in Sun Valley, Orange and Downey, CA. They are all located within one mile of major freeways with ready access to the Ports of Los Angeles and Long Beach. The Sun Valley property has 67 doors on 9.4 acres, the Orange property has 95 doors located on 8.9 acres, and the Downey property has 71 doors on 6.2 acres. Buildings on the three sites total 94,808 square feet.
“This is a great opportunity to acquire three irreplaceable locations serving the less-than-truckload industry in markets with very low vacancy rates,” says Phelan. “These cross-dock facilities are in dense, infill locations with unique entitlements that have resulted in virtually no new supply for many years. This acquisition allows us to further expand DCT Industrial's portfolio serving customers in the strong Southern California market.”
In a third transaction, DCT Industrial acquired a 50,709-square-foot bulk distribution facility located in Ontario, CA. The building, constructed in 1990, is fully leased and is located in the Inland Empire West submarket within one mile of Interstate 10. These acquisitions bring DCT Industrial’s consolidated portfolio in Southern California to 3.5 million square feet, generating annualized rent of approximately $17.1 million. Occupancy was approximately 99.2% for this portfolio as of Dec. 31, 2010, including these acquisitions.
The addresses of the nine properties are as follows; 11701 6th St., Rancho Cucamonga, CA; 3355 E. Cedar St., Ontario, CA; 2160 S. Haven Ave., Ontario, CA; 740 Palmyrita Ave., Riverside, CA; 710 Palmyrita Ave., Riverside, CA; 11937 Regentview Ave., Downey, CA; 700 N. Eckhoff St., Orange, CA; 11266 & 11300 Peoria St., Sun Valley, CA; and 4215 E. Airport Dr., Ontario, CA.
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Natalie Dolce
Natalie Dolce, editor-in-chief of GlobeSt.com and GlobeSt. Real Estate Forum, is responsible for working with editorial staff, freelancers and senior management to help plan the overarching vision that encompasses GlobeSt.com, including short-term and long-term goals for the website, how content integrates through the company’s other product lines and the overall quality of content. Previously she served as national executive editor and editor of the West Coast region for GlobeSt.com and Real Estate Forum, and was responsible for coverage of news and information pertaining to that vital real estate region. Prior to moving out to the Southern California office, she was Northeast bureau chief, covering New York City for GlobeSt.com. Her background includes a stint at InStyle Magazine, and as managing editor with New York Press, an alternative weekly New York City paper. In her career, she has also covered a variety of beats for M magazine, Arthur Frommer's Budget Travel, FashionLedge.com, and Co-Ed magazine. Dolce has also freelanced for a number of publications, including MSNBC.com and Museums New York magazine.
