By Jon Peterson
New York City-based Blackstone has put up for sale a 1.3 million square foot industrial portfolio that is located in several cities located near Sacramento. The potential pricing guidance on the planned sale is in the range of $120 million to $125 million, according to sources that track the sale of major industrial assets in Northern California.
Blackstone has hired CBRE to be the listing agent on the potential sale. Among those working on the sale are Darla Longo, vice chairman/managing director, and Rebecca Perlmutter, executive vice president. Both Blackstone and CBRE declined to comment when contacted for this story.
Should the pricing guidance be reached, the transaction would yield a cap rate in the range of 5.25 percent to 5.5 percent, as stated by sources aware of the deal. This return would be based on the asset’s current net operating income.
The portfolio has a total of eight buildings. They are located in a variety of areas that includes four in Sacramento, two in Woodland and one each in Roseville and North Highlands. The portfolio is fully leased to a total of 22 tenants. The assets include a mixture of single- and multi-tenant buildings.
Some of the single-tenant buildings are leased to tenants like American Lithographers, Core-Mark International, Interpac Technologies and the State of California Department of General Services. Long-standing tenants in the portfolio include Precision for Collision, which has been in its property since 2004, and Core-Mark and State of California that have been in its space for over 20 years.
The portfolio has both strong current income with limited rollover in the near term and the ability to add income in the future. There is only 16 percent of the space that will roll over during the next three years. This provides strong upside for the new ownership, because in-place rents are approximately 13 percent below market levels, according to industry estimates.
The overall Sacramento industrial market is one that remains tight. It has a current vacancy of 4.2 percent, according to sources that track this information. During the first half of 2020, the market had a positive absorption of 664,012 square feet in a market with a base of 180 million square feet. Rents in Sacramento region have moved up by 50 percent over the past five years or around 10 percent on an annual basis.