LOS ANGELES—Confirming published reports earlier this month, Colony Financial said Wednesday that it would acquire Cobalt Capital Partners and its 30-million-square-foot industrial portfolio for $1.6 billion. Comprised mainly of light industrial, the portfolio spans 16 markets across the US, with an emphasis on the Atlanta, Chicago and Dallas metro areas, and represents the Los Angeles-based REIT's first foray into a full-scale industrial platform. A spokeswoman declined comment on whether Colony Financial had made previous investments in the sector.

“We have consistently signaled that Colony Financial can achieve additional growth and diversification by launching focused platforms that will grow foundational returns and pursue expansion through bolt-on acquisitions,” says Thomas Barrack, executive chairman of Colony Financial. “A market-leading presence in the light industrial space is one important manifestation of this strategy.”

Barrack terms the Cobalt platform “a highly coveted portfolio of strategically located assets, in high growth markets, well positioned to benefit from a strengthening economy in the next phase of the business cycle.” Richard Saltzman, Colony Financial's CEO, cites the “embedded growth opportunities” from investments such as the Cobalt platform, adding that “we expect the capitalization for this acquisition will ultimately include substantial third party co-investment capital.”

Cobalt's Irving, TX-based management team, led by founder and managing partner Lewis D. Friedland, is being retained to run the day-to-day operations of the business, including acquisitions, asset and property management. The transaction is expected to close next month.

As Commercial Mortgage Alert first reported two weeks ago, Colony Financial has arranged financing from GE Capital Real Estate via a floating-rate loan for about 70% of the purchase price, with the balance of initial capital funded through equity. Leased to approximately 650 tenants, the portfolio of mainly light industrial assets is expected to achieve a stabilized unlevered net operating income yield of approximately 7% and produce an initial annualized return-on-equity of approximately 10%.

The Financial Times first reported in July that Cobalt and its part-owner, USAA Real Estate Investment Co., sought a buyer for the company. Citing people said to be familiar with the matter, the FT reported that Cobalt and USAA sought a valuation close to $60 per square foot, within the ballpark of the price the portfolio ultimately fetched. Most of the portfolio, which is more than 85% leased, consists of smaller properties of less than 250,000 square feet, in accordance with Cobalt's acquisitions strategy across its three industrial REITs.