Denver Industrial REIT Wants More San Francisco Bay Property

Intero, San Francisco, Bay Area, Berkshire Hathaway, HomeServices of America,

By Jon Peterson

Denver-based DCT Industrial Trust has paid $30.1 million, or $89 a square foot, to acquire an Oakland industrial building at 5800 Coliseum Way, according to market research firm Real Capital Analytics.

East Bay The Registry real estateThe single-tenant property is fully leased to Northern California health care giant Kaiser Permanente.

The anticipated one-year cash yield on the 336,680-square-foot purchase is 6.2 percent, according to fourth-quarter and 2012 financial results released by DCT earlier this month.

The company also is getting ready to open a new regional office at the Emeryville Marketplace on Shellmound Street, reflecting its interest in expanding its existing three million square-foot industrial portfolio in the Bay Area into something even greater, said Dave Haugen, a DCT vice president.

“We view Northern California as one of our premier markets,” he said.

The Coliseum Way property was first developed in 1986 and is 95 percent industrial and 5 percent, or 16,830 square feet, offices, according to data supplied by real estate services company Transwestern. The property was assessed in 2002 for tax purposes at $16.25 million, the improved value assessed at $13.9 million and the land value at $2.3 million.

DCT did not disclose the sales price itself or any other details about the transaction other than the expected yield. The seller was Morgan Stanley Real Estate, which also had no comment.

Morgan Stanley sold the property for its commingled Prime Property Fund, a core “open-ended” fund that is always open to new investors. One of its more recent large commitments was a $200 million allocation from the Ohio Bureau of Workers’ Compensation board.

DCT plans further Bay Area expansion beyond the three million square-foot warehouse-distribution property portfolio it now owns, including the latest buy. The company will entertain investments across the risk spectrum from core to value-add to development, Haugen said: “We are looking in the north Peninsula area, the East Bay in the [Interstate] 880 corridor and the Central Valley from Stockton to Tracy.”

“I do sense an uptick in investment activity from what we know and read in the brokerage reports. There has been some positive net absorption with industrial properties. I think there has been some broad-based recovery going on, which has led to some business growth in the industrial sector,” he said.

DCT is an active buyer in many other markets beyond Northern California including Southern California’s San Gabriel Valley and the Los Angeles International Airport area. In the fourth quarter it purchased 471,000 square feet in three buildings at an anticipated yield of 6.5 percent at LAX and 211,000 square feet in four buildings in the San Gabriel Valley at an expected yield of 6.2 percent. Other markets where it has bought properties recently include Chicago, Seattle and Houston.

DCT as a company has equity interests in 75.6 million square feet of properties that are leased to 870 customers. These assets are located in high-volume distribution markets in the United States and Mexico. Included in the portfolio are 14.2 million square feet of properties operated on behalf of four institutional capital management partners.

West Coast Commercial Real Estate News