08/18/2010

Big Texas Warehouse Portfolio Up for Grabs

Granite Properties is gearing up to market a Texas industrial/flex portfolio that could attract bids of up to $170 million.

The 3.1 million-square-foot package, which is 78% occupied, is divided into two pools. One has 14 Houston-area properties that are stabilized, and the other has three Dallas-area properties with upside potential.

Granite prefers to sell the institutional-quality portfolio intact. However, it will consider offers on either pool, groups of properties or individual warehouses. At the estimated value of $55/sf, the initial annual yield would be just below 7%. Holliday Fenoglio Fowler, which is advising Dallas-based Granite, will begin the marketing campaign after Labor Day.

The Houston-area properties, which are 89.5% occupied, encompass 2 million sf. Such large packages rarely come up for sale in the city, whose 291 million-sf industrial market is 90% occupied, with virtually no construction under way. Among the 78 tenants are Gulf Winds International, Kelsey Seybold, Largo International, Sensor Wise and Morison Enterprises. The weighted average remaining lease term is 4.3 years.

The properties, which have 29 total buildings, are spread around the city and in two suburbs. They are 19 years old on average. Some 28% of the properties have finished office space. Ceiling heights are 12-24 feet.

Twelve of the properties are within the city limits: Beltway Business Park, Clay Campbell Business Park, Granite Plaza/Tech 290, Greenbriar Place North, Northgreen Service Center, Pinemont Service Center, Plaza Del Oro Business Park, Post Oak Service Center, Town & Country Business Park, Wallisville Industrial Park, West by Northwest and Willowbend Distribution Center. The other two are Barbour's Cut Business Park in Morgan's Point and Bayport Container Terminal in Sea Brook.

The 1.1 million-sf Dallas-area pool is just 57% leased. The three properties, with eight buildings in all, were constructed between 2004 and 2008. The 18 tenants include Dayton Superior, MSC Industrial Direct, Stryker Corp. and U.S. Smokeless Tobacco Brands. The weighted average remaining lease term is 5.4 years. Ceiling heights are 24-32 feet. Some 31% of the properties have finished office space.

The properties are in separate submarkets: Granite Point Business Center in Denton; Lakeside Commerce Center in Flower Mound; and RiverPark Business Center in Fort Worth, just south of Dallas/Fort Worth International Airport. The package also includes two parcels suitable for the development of 770,000 sf of industrial space: 39 acres next to Lakeside Commerce Center and 16 acres near Granite Point Business Center. No industrial construction is under way in any of the submarkets. The Dallas/Fort Worth industrial market is the fifth-largest in the nation, with 658 million sf that is 88.5% occupied.

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