10/22/2008

GE Shops 80% Stake in Industrial Portfolio

GE Real Estate is looking for a joint-venture partner to commit up to $220 million of equity for a majority stake in an industrial portfolio.

The package, valued at about $675 million, encompasses 129 properties and 165 acres suitable for development. GE prefers to sell an 80% stake and to continue to manage the properties. The partnership could invest in more properties down the line.

GE would also consider selling the holdings outright, either as a portfolio or in groups of properties based on location. GE has given the listing to CB Richard Ellis, which declined to comment.

GE, which bought most of the properties last year, evidently wants to bring in a partner to shed risk in the face of prolonged credit-market turmoil. The Norwalk, Conn., company has already arranged $301 million of debt, with an average rate of 5.68%, on the portfolio from a number of lenders. If it brings in a partner, GE might be willing to supply additional debt to the joint venture, reducing the amount of cash that the partner would have to put up, according to market players. GE has provided seller financing on several other deals over the past year or so. The best estimate is that a partner would have to pay $200 million to $220 million.

The portfolio encompasses 12 million square feet of mostly light-industrial facilities in 14 U.S. markets. The properties, which average 134,000 sf, are 86% occupied by more than 400 tenants.

GE's joint venture would shoot for initial returns in the low teens. But yields could be boosted by leasing the existing buildings more aggressively, raising rents and developing the vacant land.

The portfolio consists of 40 properties in Austin, Texas (totaling 2.9 million sf); 20 in Dallas (1.7 million sf); five in Denver (1.4 million sf); 20 properties in Atlanta (1.3 million sf); 11 in Portland, Ore. (1.1 million sf); six in Cincinnati (812,000 sf); four in Los Angeles (670,000 sf); and others in Chicago, Houston, Orlando and San Antonio.

GE assumed 112 of the properties last year as part of a $2.2 billion portfolio from Crow Holdings, the Dallas fund operator. The portfolio also included multi-family and retail properties.

For more information on the offering, call CB's Jack Fraker at 972-458-4830.

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