By Jon Peterson
New York City-based KTR Capital Partners has paid $9.5 million or $77 per square foot to acquire the 121,890 square foot 1964-1976 Williams Street industrial building in San Leandro, according to sources familiar with the transaction.
The seller of the property was Lowenberg Corporation. This San Francisco-based investment company has sold the property through the assistance of the Oakland office of Colliers International. The listing agent was Greig Largomarsino, an executive vice present and corporate director. He declined to comment on the sales price of the property.
The cap rate on the sale of this property was in the six percent range, according to sources that were aware of this deal, which is based on the property’s current net operating income.
KTR is looking at this investment as value-add opportunity, even though the asset is now 100 percent occupied. This is because the rents in the 1964 vintage property are below market. Additional income can be created once the current leases expire and the space can be released to existing or new tenants.
This scenario makes sense as KTR bought the property in San Leandro for its commingled fund, KTR Industrial Fund III. This commingled fund has a value-add investment strategy. This can be buying existing properties it can improve financially and investing equity in new development projects.
KTR raised a total of $1.2 billion for Fund III in August of 2013. The company looks to buy or invest in industrial properties on a nationwide basis in markets that show promise for growth and have high barriers to entry.
As far as the San Francisco Bay Area is concerned, KTR focuses mostly on the East Bay for its transactions. It favors properties or development sites that are located in infill areas.
The industrial market in San Leandro continues to tighten up. According to data from the Oakland office of Colliers International, the vacancy for industrial properties in the market fell from 4.2 percent to 2.5 percent between the third and fourth quarters of 2014. This market has a total of 460 buildings covering 11.6 million square feet.