Gramercy Nabs Half-Billion-Dollar Industrial Portfolio

By Barbra Murray, Contributing Editor

Nicholas Pell, Gramercy Property Trust

New York—Gramercy Property Trust’s portfolio revamping program calls for the REIT to enhance its industrial holdings, and the company did just that—by a whopping 10.3 million square feet—with the acquisition of a 17-property collection of bulk warehouses spanning the U.S. The $521 million purchase included the assumption of $198 million of secured debt.

In a prepared statement, Nicholas Pell, chief investment officer of Gramercy Property Trust, said the acquisition “combines a very attractive yield with high quality assets and below market rents.”

The goal of Gramercy’s portfolio repositioning strategy, presented in detail on its Investor Day in September 2015, is to move away from high capex single-tenant and multi-tenant office properties, and focus on lower capex industrial and specialty assets. The REIT’s new purchase covers a lot of ground, literally, with locations in premier logistics markets in eight metropolitan areas: Atlanta, Charleston, Cincinnati, Dallas, Indianapolis, Jacksonville, Memphis and Sacramento. But there’s more to the portfolio than key locations. Twelve of the properties fall squarely into Gramercy’s single-tenant target group, and 15 of the assets are stabilized.

With the completion of the transaction, Gramercy’s portfolio is now 70 percent industrial, up from 47 percent just one year ago. “Our portfolio repositioning is basically finished and it’s gone much, much faster than we laid out to investors,” Gordon DuGan, CEO of Gramercy Property Trust, said during the REIT’s third quarter earnings call on November 2.  Year-to-date, Gramercy has invested $1.3 billion in purchases. Funding the expeditious portfolio transformation is the recycling side of the strategy. Sell some, buy some. Included in the company’s bevy of office dispositions this year are 70 and 90 Hudson St., in Jersey City, N.J., which fetched a total of $299 million, and a national group of office buildings and a single industrial property, which brought in $206.7 million.

“We enter 2017 with a high-quality portfolio, tremendous financial flexibility and a market leading operating platform to meet future opportunities and challenges,” Pell added.