In $770M Deal, DEXUS Sells 16.7 MSF Industrial Portfolio to Blackstone
- Jun 26, 2012
Retraining its focus, DEXUS Property Group has traded a collection of industrial properties totaling 16.7 million square feet for $770 million. Affiliates of Blackstone Real Estate Partners VII picked up the 68 assets in what is being touted as the largest industrial portfolio transaction in the U.S. so far this year.
Eastdil Secured marketed the properties to a targeted group of investors on behalf of DEXUS, which is based in Sydney, Australia. The seller’s goal was the quick stabilization and disposition of the industrial facilities, located in 11 cities across the central U.S. “It’s been part of our global strategy for two years to focus on the West Coast,” Bruce McDonald, managing director, U.S. investments with DEXUS, told CPE. “Our strategy is to concentrate human capital, capital and contacts in fewer markets, so we’re executing a strategy we’ve had for quite some time, which was to sell out of all of the U.S. except for the West Coast.”
The U.S. division of DEXUS had been grooming the collection of assets since its establishment in 2010, having taken the occupancy level at the 65-property core portfolio from 79 percent to 90 percent. The rest of the portfolio consists of three premier build-to-suit properties that are leased in their entirety by Whirlpool Corp. , including one in San Antonio (pictured).
Now that it has disposed of its industrial assets in the U.S. heartland, DEXUS is primed to concentrate its attention on the West Coast industrial market, where demand is increasingly strong. The metropolitan Los Angeles market continues to hold the title of the nation’s tightest, with a vacancy rate of just 4.7 percent, according to a report by Cushman & Wakefield Inc. And the call for prime space in Southern California’s Inland Empire is so loud that the market leads the U.S. in speculative development, with 6 million square feet under construction.
For DEXUS, the appeal of the West Coast is simple: “It’s port-related,” McDonald said. “For industrial guys, the Ports of L.A., Long Beach and Seattle are very promising and industrial growth in the West is anticipated to be greater.”