$270M Buys 22-Property Industrial Portfolio

By Barbra Murray, Contributing Editor
Commercial Property News
Sept 12, 2007

Acting on behalf of a private client, Strategic Real Estate Advisors has purchased a nearly 5.5 million-square-foot industrial portfolio from TIAA-CREF in a $270 million deal. The 22 warehouse and distribution facility assets, picked up for a total of $270 million, are located across 11 cities.The portfolio, which boasts an average occupancy level of 91 percent, covers a long list of thriving industrial markets including Greater Cincinnati, Greater Philadelphia, Atlanta, Memphis, as well as Salt Lake City, Phoenix, San Diego, Chicago, Dallas, El Paso and Oakland. Credit-Suisse Column Financial supplied the funding for the purchase. With the close of the transaction, StratReal's U.S. logistics portfolio has grown to encompass nearly 30 million square feet.

The industrial real estate sector throughout the United States. is booming. As per a second quarter report by real estate services firm Grubb & Ellis Co., the average vacancy rate for industrial properties fell 10 points from the first quarter to 7.6 percent. Growth in the logistics industry continues to play a significant role in the demand for industrial product, particularly facilities located within close proximity to ports and airports. As a testament to the desirability of the market, investor activity has been substantial. In August, a joint venture led by KBS Real Estate Investment Trust spent $516 million to purchase an 11.4 million-square-foot industrial portfolio consisting of 24 properties in leading industrial markets in seven states across the country. And July was an especially active month. Among the long list of transactions was Walton Street Capital's acquisition of the 23.5 million-square-foot CalWest portfolio from California Public Employees Retirement System and RREEF for a reported sum of $2.8 billion. ProLogis, acting through its newly established ProLogis North American Properties Fund III, bought a group of 114 distribution facilities totaling 24.7 million square feet in four states, along with 518 acres of vacant land, for nearly $1.9 billion.

Based in London, StratReal is an independent real estate investment advisor and asset manager that has closed more than $9 billion in transactions for its clients over the last nine years. TIAA-CREF is a provider of retirement services and, with over $68 billion invested in real estate assets, is one of the largest institutional real estate investors in the United States.