Invesco Sells East Bay Industrial Property at a $3MM Loss

Invesco, East Bay, Commercial Real Estate News, KTR Capital Partners, Cassidy Turley Commercial Real Estate Services, San Francisco, Hayward

29902 through 20991 Cabot Blvd in Hayward real estate The RegistryBy Jon Peterson

Atlanta-based Invesco Real Estate has sold the 223,505 square foot North Hayward Corporate Center industrial complex in Hayward at a $3 million loss. The sales price was $21.3 million or $96 per square foot. This compares to the $110 per square foot that Invesco acquired the property for in April of 2007, according to sources aware of the transaction.

Seven of the eight buildings in the complex were sold to New York City-based KTR Capital Partners. The other building was sold to an un-named buyer. The entire complex is located at 29902 through 20991 Cabot Blvd. in Hayward.

The sale of the property produced a 4.9 percent cap rate based on the existing rent in the complex. The trade of the industrial property produced a negative 0.8 percent gross IRR.

Invesco did not respond to phone calls seeking comment for this story. The real estate manager had owned the property in Hayward for its separate account pension fund client, the Boston-based Massachusetts Pension Reserves Investment Management Board.

The seller had traded the property with the assistance of the San Francisco office of Cassidy Turley Commercial Real Estate Services. The two brokers on the deal were Robert Gilley and Steve Hermann in the company’s San Francisco. They declined to comment on the sales price of the property due to a non-disclosure agreement that it signed.

There is going to be a chance for the new owner to add value to the property going forward. There are rents in the property that are significantly below market and these leases could be brought to market in the future, according to sources with direct knowledge of the Hayward industrial market.

KTR is planning renovation to the property. “We are planning some light work done to the property going forward. This would include putting in a new HVAC system, landscaping and signage work,” says Brittany Sanders, in business development for KTR Capital.

North Hayward was first developed in 1987. The complex is now 96 percent occupied. The property is considered to be light industrial flex space. The amount of space taken by the tenants varies from as low as 2,000 up to as much as 32,000 square feet. The complex has somewhere in the range of 15 percent to 20 percent office space.

The industrial market in Hayward remains a tight one. “Rents in the market are now moving up, and the current vacancy in the area is now around 8 percent. There is very little land for new development but some new product is being added by tearing down an existing building and redeveloping,” says Hermann of Cassidy Turley.

KTR Capital acquired the property in Hayward for its commingled fund, KTR Industrial Fund III. It raised $1.2 billion of equity for this fund and had a final closing on the fund last year.

KTR Capital is a major owner of industrial properties in the Bay Area. It has existing properties totaling 1.5 million square feet and has a 500,000 square foot development happening at Pinole Point in Richmond.

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