Taurus Investment Holdings, a global private equity real estate firm, has acquired a $124 million industrial portfolio of 12 Class B buildings in Atlanta and Dallas, Commercial Observer has learned.
Financing was provided by “a larger life insurance company” following a bid process, according to Bill Garey, head of acquisitions at Taurus, who could not disclose the lender. The sale was brokered by CBRE (CBRE), which did not disclose the brokers’ names upon request.
Compared to banks, the life insurance company market “is so much stronger. It’s just a challenging market right now for lenders,” Garey told CO of the bidding process. “We probably had a competitive quota of four to six actors that were fairly active, and three that really fit what we were trying to hit.”
The total square footage on the transaction is 924,700 square feet. The average building size in the portfolio is 77,000 square feet and the average tenant size is 30,000 square feet, according to Taurus.
Garey said his team was attracted to the shallow bay industrial space — typically smaller industrial buildings each between 25,000 to 125,000 square feet — in a pair of land-constrained Southern submarkets. He noted that the supply in the region is favorable toward Taurus’ metrics on the transaction, with construction in Dallas and Atlanta as a percentage of overall inventory sitting at 5 to 7 percent, making up less than 1 percent for all comparable shallow bay buildings.
“We think there will be continued growth and demand,” said Garey. “We think this is a sweet spot for us, where we see our own portfolio with the most growth, most demand, but it also fits very well from a synergy perspective of where we own assets and what we’re seeing.”
The last-mile industrial space has grown in recent years as e-commerce has become further integrated into the economy, with these buildings serving as the final stop in a logistics pipeline for supplies of larger warehouses that are too far outside the main metropolitan areas of delivery.
The assets Taurus acquired are currently 99.4 percent leased to 32 tenants, according to Garey, who told CO that his team sees “a huge upside in rents,” and believes that rents in the portfolio are 60 percent below market rates.
“It’s more like 70 percent with leases rolling up in the next four to five years,” he said, noting that the portfolio’s weighted average lease term (WALT) is less than four years. “There’s a lot of near-term upside without future growth necessary. We think the basis is very attractive and fits well with our current portfolio.”
Taurus is a global private equity research firm headquartered in Boston with offices in Munich, London, New York, Istanbul and nine other cities. The firm has acquired or developed more than 70 million square feet of commercial real estate with a total value of $10.5 billion, according to the company website.
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