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NEW YORK CITY-The volume of single-tenant industrial property sales during the first quarter hit its lowest since the same quarter in 2003, at least among properties and portfolios of $5 million and greater, which is what Real Capital Analytics Inc. tracks.

The data provider counted $200 million of single-tenant industrial assets changing hands in the first three months of the year, and almost $3.34 billion for the 12 months through the first quarter, a 65% decline compared to the prior 12-month period.

Cap rates, as would be expected, rose further, to a 12-month average of 7.6% at the end of the first quarter, RCA also reports, a 108 basis point increase from the prior 12-month period.

But deals are getting done. New York City-based non-traded REIT American Realty Capital Trust Inc., for example, recently announced that it expects to close on a newly built freight facility double-net leased to FedEx Freight this month. The purchase price is $30.9 million and the 152,640-square-foot facility in northwest Houston has a 15-year lease, plus two five-year extension options, that is guaranteed by the tenant’s parent FedEx Corp. Base rent increases 8% every five years, according to ARCT, which is buying the property from developer PinPoint Commercial and putting approximately 50% leverage on it with a first mortgage from KBC Bank NA.

In another recent example, San Antonio, TX-based private REIT US Industrial REIT III, an affiliate of USAA Real Estate Co., purchased a 657,600-square-foot distribution facility leased to do-it-yourself home improvement retailer Home Depot USA Inc. The purchase price was not disclosed; the Tracy, CA property is also a new build and has a 15-year lease.

Earlier this year, another private investor, Austin, TX-based sale-leaseback specialist AIC Ventures LP, paid an undisclosed sum for two properties leased back to publication/printing company St. Ives USA. Totaling more than 500,000 square feet, the properties are located in Hollywood, FL and Cleveland, OH.

Single-tenant industrial properties are faring better in the sales market than their office and retail brethren, Northbrook, IL-based Boulder Net Lease Funds LLC reported in its first quarter net lease market report. “Industrial properties, while declining in overall value, performed the best out of the three major sectors,” the Boulder report states. “Median cap rates in the over 4,000 properties tracked by Boulder held constant around 8% during the quarter. Boulder attributes this to the relative safety associated with lower vacancy risk nationally in the sector.”

In fact, Noulder, which tracks all net lease properties regardless of dollar size, reported an increase in transactions during the first quarter of 2009. “Transactions… were up across all sectors, especially in the industrial sector where compared to the fourth quarter (the worst since 2005), transactions increased too an astounding 464%,” the Boulder report states. “The number of transactions closed in the industrial sector grew to 50% above first quarter 2008. Office and retail transactions increased over 228% and 284%, respectively, as activity volume increased closer towards historic levels. The impetus for buyer activity seems to be the upward trend in cap rates, which are helping to alleviate the financial burden of costly debt terms.”

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