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Done deal: CalWest finalizes its purchase of Cabot Industrial

CalWest Industrial Properties, a joint venture of Chicago-based RREEF and Sacramento, Calif.-based California Public Employees' Retirement System (CalPERS), has closed on its $2.1 billion purchase of Boston-based Cabot Industrial Trust. The purchase price included the assumption of approximately $930 million in debt.

RREEF has assumed the management of Cabot's 41 million sq. ft., 360-property portfolio, which includes warehouse, distribution and workspace facilities in 19 markets nationwide. A majority of Cabot's property management and accounting employees will join RREEF, according to RREEF.

New York-based J.P. Morgan was the exclusive financial advisor to Cabot Industrial Trust in the transaction, and the law firm of Mayer, Brown & Platt acted as its legal advisor. New York-based Goldman, Sachs & Co. was the exclusive financial advisor to CalWest in the deal, and Los Angeles-based CB Richard Ellis was the company's real estate agent. The law firm of Orrick, Herrington & Sutcliffe LLP was CalWest's legal advisor.

With the completion of the deal, CalPERS owns 118 million sq. ft. of industrial properties. RREEF now manages 180 million sq. ft. of commercial real estate, a total that includes 130 million sq. ft. of industrial properties.

The sale was a good deal for Cabot's shareholders, said Gary Boston, an analyst with Salomon Smith Barney Inc. who covered Cabot. “Cabot obtained an acquisition price that was in line with estimates of its net asset value.”

The purchase also makes sense for CalWest, Boston added. “Industrial properties have a history of being attractive to pension funds,” he said. “There is a belief that they have more stable cash flows and longer leases. And those are definitely positives.”

Cabot's aggressiveness in recent years as a developer is another benefit for CalWest, Boston noted. “There are some relatively new properties in that portfolio.”

There's a new kid on the block: Lincoln Property arrives in Phoenix

Dallas-based Lincoln Property Co. has been eyeing the Phoenix market for a while, and now it is making its move. The company has begun construction on its first development in the city: Lincoln Commerce Park, an eight-building, 523,000 sq. ft. industrial park located approximately three miles from Phoenix Sky Harbor International Airport.

Completion of the first phase of the project, which will consist of four speculative buildings totaling 224,116 sq. ft., is scheduled for July 2002. The second phase will feature build-to-suit facilities.

Lincoln has been interested in establishing a presence in Phoenix for at least a couple of years because of the city's tremendous growth, said David Krumwiede, executive vice president of Lincoln who heads the company's operations in Arizona, Utah, Nevada and New Mexico. The Phoenix metropolitan area grew 45% between the 1990 Census and the 2000 Census.

Krumwiede said Lincoln is confident in the project despite the economic recession. “If the economy starts to pick up in the middle of next year, then our timing could be very good,” he said.

Break out the champagne: United Liquors leases warehouse

West Bridgewater, Mass.-based United Liquors Ltd. has signed a lease for a 484,000 sq. ft. warehouse in Braintree, Mass. San Francisco-based AMB Property Corp. is the landlord of the facility. Terms of the transaction were not disclosed.

Cathy Minnerly of Boston-based NAI Hunnerman Commercial represented United Liquors in the lease negotiations, and Robert DeMarco of Braintree-based Campanelli Cos. represented AMB Property.

Equity REIT Performance by Property Sector
(Percentage change in total returns*)
Total return
(Entire year)
(As of Nov. 30)
Office 35.46% 3.11%
Industrial 28.62% 6.82%
Retail 17.97% 27.25%
Apartments 35.53% 7.26%
Lodging/Resorts 45.77% -13.31%
* Total return includes a stock's dividend income plus capital appreciation, before taxes and commissions. — Source: NAREIT

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