$9.5M Purchase of Industrial Facility by Gramercy Property Trust

By Anca Gagiuc, Associate Editor

The real estate investment trust Gramercy Property Trust announced the acquisition of an industrial facility in Austin. The transaction went through after the company executed definitive agreements for a private placement of 11,545,200 shares of common equity at $4.11 per share. The Private Placement raised gross proceeds of $47.4 million.

The Austin building is about 120,350 square feet and was purchased all-cash for the price of $9.5 million.  The facility is entirely leased through October 2028 by a prominent provider of linen management services for the US health care industry. With a 7.56 percent initial cap rate and an 8.25 percent GAAP cap rate, the year 1 operating income is approximately $717,000 with fixed rent escalations throughout the lease term.

The industrial Austin market view shows an occupancy rate of 89.3 percent, the highest in the past 12 years. The leasing activity continued on a steady pace in the third quarter, tracking 206, 454 square feet of positive net absorption, shows a CBRE report. The warehouse product accounts for 66 percent of the citywide net absorption. Rates are on a rising trend on all product types, but at a limited speed. However, several institutional landlords offer a negotiable rate for projects with high vacancy because the size and term of the prospective tenants influence the rate.