US: RREEF has acquired the AMB Institutional Alliance Fund I industrial portfolio for $618 million. The investment manager made the purchase on behalf of its commingled fund RREEF America II.
Industry experts have indicated that the cap rate on this transaction is 5.5% to 6% based on the properties’ net operating income.
The fund contained 100 industrial buildings located across 11 regional markets totalling 5.8 million sq ft.
It attracted interest from many of the top pension fund managers around the country because of the difficulty of accumulating large numbers of industrial properties. Portfolio deals are the preferred route for many investors and this one was viewed as a core purchase.
AMB Property Corporation formed the multi-investor fund in 1999. It was a publicly traded REIT with $212 million of equity. Around 79% – or $169m – came from third party investors and the balance from AMB.
Following a review, AMB decided to sell the assets in the Institutional Alliance Fund I in the summer and autumn of 2005.
John Roberts, president of AMB Capital Partners, said: “Some of the developments and renovated properties in the fund had become stabilised. Another factor was that there is a lot of capital in the market for industrial now."
AMB could have waited, however. The Institutional Alliance Fund I had another two years to run.
AMB’s next commingled fund will cover assets in Europe. AMB’s European portfolio adds up to around 3.8 million sq ft. This includes operating properties and some in the development pipeline. The gross value of the assets is in the range of $500 million to $600 million.
AMB’s European commingled fund should launch later this year.