HOUSTON-Cabot Properties Inc. has bulked up its local industrial portfolio through the acquisition of 11 properties totaling 1.2 million square feet. The purchase price was undislosed, but local experts estimate the portfolio, which includes both distribution and flex-industrial space, traded for more than $50 million.
The Boston-based firm bought the portfolio from Granite Properties Inc. in an all-cash deal through the Cabot Industrial Value Fund III. The fund seeks to invest up to $1.5 billion in the industrial property sector, focusing on major markets throughout North America and the United Kingdom.
The 11 properties were part of a 16-property industrial portfolio owned by Granite. The Dallas-based firm made the decision last year to exit the industrial market and focus on office properties. With the sale to Cabot, Granite no longer owns any industrial properties, according to Rusty Tamlyn, a senior managing director with HFF’s local office.
Tamlyn marketed the entire 16-property portfolio on behalf of Granite, working with HFF associate director Trent Agnew, senior managing director Randy Baird, managing director Jud Clements and director Robby Rieke. In December 2010, Exeter Property Group acquired three properties located in Dallas, while Duke Realty Corp. bought two properties situated near the Port of Houston.
“This is the last piece,” Tamlyn tells GlobeSt.com, adding that Granite chose to split up the portfolio in order to maximize value. Cabot was the high bidder for the 11-property portfolio, which is spread across several Houston submarkets.
“This is the largest industrial portfolio that has been on the market for 15 years,” Tamlyn notes. “We usually don’t have much industrial product of any scale that comes on the market.”
Tamlyn says Cabot’s newly-acquired properties range from 100% occupied to completely empty. As a whole, the portfolio was 84% leased at the time of closing.
“This is value-added acquisition because rents are below market in a lot of cases, Cabot has the opportunity to lease the portfolio,” Tamlyn notes, pointing specifically to Granite Plaza/Tech 290, a two-building complex offering 84,025 square feet of flex industrial space that is completely vacant.
Tamlyn says Cabot was one of several investors interested in Granite’s portfolio. “Houston is on everyone’s radar because it’s a growth market,” he points out. “We had 4.3 million square feet of net absorption in the industrial sector – that puts us in the top five markets in the country – and most people think rental rates will go up.”
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