News
Bisnow Exclusive: Granite Sells Industrial Portfolio
August 23, 2010
| Granite Properties has decided to exit the industrial sector and is bringing its entire Houston and Dallas industrial portfolio to market. | |
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| The portfolio consists of 17 properties (14 in Houston, three in Dallas) totaling 3M SF and will come to market after Labor Day. Our Houston reporter sat down with HFF's Trent Agnew and Rusty Tamlyn, who (with Dallas coworkers Jud Clements, Robby Rieke, and Kelsey Roop) are repping Granite. Rusty tells us Granite wants to focus on expanding its existing office portfolio and is selling now because capital markets are strong as is investor demand, debt is readily available, and there's a scarcity of industrial product for sale. Rusty says Granite hopes to transact to one buyer (or perhaps one in Houston and one in Dallas), but group and individual offers will be considered. | |
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| Rusty says the offering is especially significant in Houston, where few industrial portfolios are put to market. It's also a rare opportunity ("once in every 10 years deal") to break into the Texas market and automatically become a large landlord. Pricing expectations are around $170M ($55/SF), with a year-one cap rate under 7% at the current weighted average 78% occupancy. Rusty tells us Granite is also interested in doing product swaps in its existing cities of Atlanta, Austin, Dallas, Denver and Houston as well as on the east and west coasts of the US to increase its office portfolio. He expects interest from both public and private REITs, pension funds and private buyers, and predicts offers from both established owners and new buyers to the area. He tells us the goal is to lock in a buyer by year-end. There's no existing financing, but HFF's Dallas office (headed by John Rose) will have some available for buyers. | |
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| The 1.1M SF Dallas portfolio is comprised of newly constructed, bulk industrial currently 57% leased to a strong group of tenants in diversified industries, with an average remaining lease term of 5.4 years. Among the portfolio is the 298k SF Granite Point Business Center (above) in Denton; 501k SF RiverPark Business Center in Fort Worth; and the 346k SF Lakeside Commerce Center in Flower Mound. Two of the sites have room for future development with about 39 acres adjacent to Lakeside Commerce Center that can accommodate an another 520k SF. Adjacent to Granite Point Business Center is 15.8 acres that can accommodate 250k SF of industrial product. As the DFW industrial market fundamentals continue to improve, these two well-located development parcels are expected to add to the overall returns. |
