First Industrial sold $98 million worth of property in the quarter at an 8.8% capitalization rate, says chief investment officer Johannson L. Yap, and at an unleveraged rate of return of 19.2%, in 24 transactions involving properties in 12 markets. "We were able to do this by selling each asset to the most strategic buyer," Yap explains in the REIT's second-quarter earnings conference call.
Among the sales was a 90,833-sf northwest suburban facility at 280-96 Palatine Rd. that sold for $4.3 million, a 56,017-sf building at 7359 S. Hamlin Ave. in Chicago for $1.5 million and a 66,000-sf building around the corner at 3900 W. 74th St. for $1.2 million.
On the other hand, First Industrial acquired $88 million in property during the second quarter, buying in at an 11.3% capitalization rate and anticipated unleveraged rate of return of 13.1%, Yap reports.
"One of the ways we were able to accomplish this was assisting GM in reconfiguring their national parts logistics services," Yap admits. The four-property package included a facility in west suburban Broadview.
On the sales side, private investors represented 46% of the deals followed by users at 35%. Institutional buyers did 7% of the First Industrial deals with Section 1031 exchange buyers representing 4% of the REIT's market. However, 1031 exchange buyers and users bought in at cap rates in the low 8% range, Yap reports.
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