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Gramercy (GPT) Acquires Logistics Portfolio for $521 Million
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Gramercy Property Trust announced the acquisition of a 17-property core logistics portfolio for $521 million. The move comes as part of its effort to enhance its industrial portfolio, which now comprises around 70% of its total portfolio, up from 47% a year ago.
The Class A warehouse portfolio acquired comprises 10.3 million square foot of space, positioned in strategic logistics markets throughout the U.S. There are 15 stabilized assets in this portfolio, spanning 9.3 million square feet, having a weighted average remaining lease term of 5.2 years. These 15 assets are located in Atlanta, Charleston, Cincinnati, Dallas, Indianapolis, Jacksonville, Memphis and Sacramento.
Moreover, there are two value-add assets, which aggregate around 980,900 square feet of space. One of the value-add property is in Fairfield, CA, with a short-term in-place lease, while the other value-add asset is in Southhaven, MS and is 53% leased to a single tenant, through Aug 2021. With this 17-property portfolio acquisition, the company also assumed around $198 million of secured debt.
According to the company’s Chief Investment Officer – Nicholas Pell – this acquisition “combines a very attractive yield with high quality assets and below market rents” and is “a key building block” in the implementation of its “portfolio recycling plan”.
Notably, in the industrial real estate market, demand for space has been quite high. This is because amid economic expansion, e-commerce boom and heightened urbanization, companies are shifting their strategy toward services like same-day delivery and other such options. This has been propelling demand for warehouse distribution facilities. Also, with a larger customer base, companies are opting for supply-chain consolidation, resulting in greater demand for logistics infrastructure and efficient distribution networks. This, in turn, is creating scope for industrial REITs to flourish.
Amid this, Gramercy remains well poised to capitalize on this favorable trend. The company has significantly reinforced its industrial portfolio, which now comprises a greater part of the total portfolio. In addition, as part of its portfolio recycling plan, it has strategically lowered its exposure to office assets to around 25% from 48%, a year before.
Further, this transaction brings the company’s 2016 investment volume to over $1.3 billion, with an average initial cash cap rate of 6.9% and 9.9 years of weighted average remaining lease term, which is encouraging.
Additionally, the move is a strategic fit given the expectations of the stabilized properties generating 2017 cash net operating income (NOI) of around $30.3 million (5.2 years of weighted average remaining lease term). The two-value add assets are estimated to reap $4.6 million of cash NOI, upon stabilization.
Gramercy currently has a Zacks Rank #3 (Hold). Year to date, shares of Gramercy ascended 11.8% against the Zacks categorized REIT – Equity Trust – Other industry’s gain of 3.3%.
Mack-Cali’s 2016 funds from operations (“FFO”) per share estimates ascended 1.4% over the past 30 days to $2.19.
DCT Industrial delivered an average positive surprise of 5.18%, over the trailing four quarters.
Seritage Growth Properties’ current-year FFO estimates moved up 0.9% to $2.34 per share, over the past 60 days.
Note: All EPS numbers presented in this write up represent funds from operations (“FFO”) per share. FFO, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income.
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Gramercy (GPT) Acquires Logistics Portfolio for $521 Million
Gramercy Property Trust announced the acquisition of a 17-property core logistics portfolio for $521 million. The move comes as part of its effort to enhance its industrial portfolio, which now comprises around 70% of its total portfolio, up from 47% a year ago.
The Class A warehouse portfolio acquired comprises 10.3 million square foot of space, positioned in strategic logistics markets throughout the U.S. There are 15 stabilized assets in this portfolio, spanning 9.3 million square feet, having a weighted average remaining lease term of 5.2 years. These 15 assets are located in Atlanta, Charleston, Cincinnati, Dallas, Indianapolis, Jacksonville, Memphis and Sacramento.
Moreover, there are two value-add assets, which aggregate around 980,900 square feet of space. One of the value-add property is in Fairfield, CA, with a short-term in-place lease, while the other value-add asset is in Southhaven, MS and is 53% leased to a single tenant, through Aug 2021. With this 17-property portfolio acquisition, the company also assumed around $198 million of secured debt.
According to the company’s Chief Investment Officer – Nicholas Pell – this acquisition “combines a very attractive yield with high quality assets and below market rents” and is “a key building block” in the implementation of its “portfolio recycling plan”.
Notably, in the industrial real estate market, demand for space has been quite high. This is because amid economic expansion, e-commerce boom and heightened urbanization, companies are shifting their strategy toward services like same-day delivery and other such options. This has been propelling demand for warehouse distribution facilities. Also, with a larger customer base, companies are opting for supply-chain consolidation, resulting in greater demand for logistics infrastructure and efficient distribution networks. This, in turn, is creating scope for industrial REITs to flourish.
Amid this, Gramercy remains well poised to capitalize on this favorable trend. The company has significantly reinforced its industrial portfolio, which now comprises a greater part of the total portfolio. In addition, as part of its portfolio recycling plan, it has strategically lowered its exposure to office assets to around 25% from 48%, a year before.
Further, this transaction brings the company’s 2016 investment volume to over $1.3 billion, with an average initial cash cap rate of 6.9% and 9.9 years of weighted average remaining lease term, which is encouraging.
Additionally, the move is a strategic fit given the expectations of the stabilized properties generating 2017 cash net operating income (NOI) of around $30.3 million (5.2 years of weighted average remaining lease term). The two-value add assets are estimated to reap $4.6 million of cash NOI, upon stabilization.
Gramercy currently has a Zacks Rank #3 (Hold). Year to date, shares of Gramercy ascended 11.8% against the Zacks categorized REIT – Equity Trust – Other industry’s gain of 3.3%.
Investors interested in the REIT industry can consider stocks like Mack-Cali Realty Corporation , DCT Industrial Trust and Seritage Growth Properties (SRG - Free Report) . Each of these stocks has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Mack-Cali’s 2016 funds from operations (“FFO”) per share estimates ascended 1.4% over the past 30 days to $2.19.
DCT Industrial delivered an average positive surprise of 5.18%, over the trailing four quarters.
Seritage Growth Properties’ current-year FFO estimates moved up 0.9% to $2.34 per share, over the past 60 days.
Note: All EPS numbers presented in this write up represent funds from operations (“FFO”) per share. FFO, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income.
The Best Place to Start Your Stock Search
Today, you are invited to download the full list of 220 Zacks Rank #1 "Strong Buy" stocks – absolutely free of charge. Since 1988, Zacks Rank #1 stocks have nearly tripled the market, with average gains of +26% per year. Plus, you can access the list of portfolio-killing Zacks Rank #5 "Strong Sells" and other private research. See these stocks free >>