Stockbridge Acquires 26-Property Industrial Portfolio

Article originally posted on CoStar on August 15, 2019

This San Bernardino, California, industrial property was among several in a large portfolio that recently changed hands. (CoStar)

Investment firm Westcore Properties has sold a 6.35 million-square-foot, top-tier industrial property portfolio to Stockbridge Capital Group, among the latest signs of high activity among investors in a hot U.S. property sector.

The portfolio of 26 properties in nine U.S. cities was assembled over the past three years in primarily off-market transactions, and buildings are being sold for an undisclosed price that provided a “a notable gain” for investors after almost all of them were renovated by Westcore, according to Westcore Chairman Marc Brutten.

The almost fully-occupied properties include 11 locations in nine California cities, 12 in Sparks, Nevada, and one each in Phoenix, Salt Lake City and Lebanon, Indiana. The buildings’ tenants are primarily big-box and last-mile distribution tenants, said officials of San Diego-based Westcore, which was started in 2000 and owns industrial and office properties in the United States and Europe.

“We are very positive about the underlying market fundamentals for industrial property,” said Westcore Chief Executive Don Ankeny in a statement. “We’re continuing to work with our broker partners to identify and secure industrial properties in established and emerging markets where we can unlock value and continue to grow our business.”

Stockbridge, a San Francisco private-equity real estate investment firm, has been active this year as both a buyer and seller in the U.S. industrial sector. In Hanahan, South Carolina, for instance, it recently acquired a distribution center leased by defense contractor Science Applications International Corp. for $35.5 million.

The latest CoStar data indicate that many U.S. industrial markets have historically low vacancy rates — largely well below 10% — as construction remains limited relative to rising demand particularly among e-commerce and other logistics-heavy industries.

Most of the metropolitan markets represented in the Westcore-Stockbridge deal have single-digit vacancy rates and annual rent growth above the national average of 4.8%, according to CoStar figures. For instance, industrial rents have grown 9.8% over the past year in Stockton, California, where three of the properties are located; 8.5% in Salt Lake City; and 6.3% in Southern California’s Inland Empire, home to two of the properties.

For the Record: Stephen Silk, Jay Borzi and Adam Pastor of Eastdil Secured represented Westcore Properties in the portfolio sale, while Stockbridge Capital Group represented itself.

The properties sold:

California

927 E. 9th Street & 7776 E. Tippecanoe Ave., San Bernardino

22705 Newhope St., Moreno Valley

3834 Duck Creek Drive, Stockton

133 & 155 Mata Way, San Marcos

500-938 S. Andreasen Drive, Escondido

13915 Maryton Ave., Santa Fe Springs

2200-2300 Wilbur Ave. & 2110-2300 Wilbur Lane, Antioch

1627 Army Court, Stockton

4545 Qantas Lane, Stockton

1050 E. Grant Line Road, Tracy

5675 Sunol Blvd., Pleasanton

Arizona

7037 W. Van Buren St., Phoenix

Nevada

445 E. Glendale Ave., Sparks

550 Coney Island Drive, Sparks

960 United Circle Drive, Sparks

980 United Circle Drive, Sparks

1050 Spice Islands Drive, Sparks

1750 Purina Way, Sparks

940 Spice Islands Drive, Sparks

1277-1295 Spice Islands Drive, Sparks

750 Spice Islands Drive, Sparks

748 Spice Islands Drive, Sparks

700-742 Spice Islands Drive, Sparks

1259-1275 Spice Islands Drive, Sparks

Utah

4745 Amelia Earhart Drive, Salt Lake City

Indiana

135 S. Mt. Zion Road, Lebanon

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