REIT Buying Lehigh Valley, PA Industrial Assets in $137.3M Portfolio Trade

"Subsidiaries of Industrial Income Trust Inc. (IIT) have agreed to pay $137.3 million for a 100 percent fee interest in 11 industrial buildings totaling 3.5 million square feet on 201.3 acres in Plainfeld, IN and Lehigh Valley, PA.
The The IN/PA Industrial Portfolio is 93 percent leased to 23 tenants. IIT estimates the purchase price cap rate at 6.7 percent.

The Sellers are:
• KPJV Ruppsville Road LP (PA)
• KPJV 861 Nestle Way LP (PA)
• KPJV 7566 Morris Court LP (PA)
• KPJV 7520 Morris Court LP (PA)
• KPJV 595 South Perry Road LP (IN)
• KPJV 909 Whitaker Road LP (IN)
• KPJV 849 Whitaker Road LP (IN)
• KPJV 923 Whitaker Road LP (IN)
• KPJV 558 Airtech Parkway LP, (IN) and
• KPJV 5252 Decatur Boulevard LP. (IN)

In 2003, Keystone Property Trust formed a joint venture with the Mercantile Safe Deposit & Trust Company as Trustee for the AFL-CIO Building Investment Trust. Keystone contributed a $90 million portfolio of properties primarily located in Indianapolis, but also including properties in Allentown, Pennsylvania and one in Central New Jersey, to the venture, which was known as BIT.

Keystone's contribution consisted of eight industrial properties totaling approximately 2.0 million square feet. Among the properties contributed, Keystone reported that it had contributed the two buildings on Morris Court in Allentown, PA, which total about 265,000 square feet, into the joint venture. In its Annual Report, Keystone listed the three properties on Whitaker Road, which total about 885,000 square feet, as part of its BIT JV.

Currently, two tenants in the IN/PA Industrial Portfolio individually lease more than 10 percent of the rentable area of the entire portfolio:

• Home Depot U.S.A., Inc. leases 823,000 square feet, or approximately 23 percent of the portfolio's rentable area, under a lease that expires in June 2013 with no options to extend. The annual base rent under the lease is currently approximately $3.6 million and is subject to a rent escalation of approximately 2.0% in July 2012.

• Belkin International, Inc., a consumer electronic devices company, leases 798,000 square feet, or approximately 23% of the portfolio's rentable area, under a lease that expires in November 2019 with two options to extend the lease for a period of five years each. The annual base rent under the lease is currently approximately $2.7 million and is subject to rent escalations of approximately 4.5% in November 2014 and an additional 5.7% in November 2017.

The $137.3 million purchase price is exclusive of transfer taxes, due diligence expenses, and other closing costs."
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