By Jon Peterson
Boston-based Cabot Properties has paid $7.6 million to acquire the 73,498 square foot Federal Way Corporate Center in Federal Way. The industrial property is located at 34210 9th Avenue South.
“This transaction represents the first property that we have acquired in Federal Way. We liked the location of the property as its located right off of I-5, so our tenants have good access to the major transportation hub in the region, “says Justin Harvey, a senior vice president of investments with Cabot. Seattle is one of the markets that he covers for the company.
The cap rate on this transaction is 6.3 percent. This return is based on the property’s current net operating income.
During the negotiating process of buying the property, there was some value-add activity happening with the leasing of the property. This involved some renewing leases in the property. The asset is now essentially a fully occupied asset. The property was originally developed in 2001.
The seller of the property was Fedway Group LLC. Both the buyer and seller were represented in the deal by the Seattle office of The Andover Company/CORFAC International.
“This property did attract strong interest at its located in a market with little vacancy and one that doesn’t have a great deal of industrial product be added to it. Federal Way is a market that is more known for its office and retail space. The land costs just don’t allow for much new industrial product to be added to the marketplace,” said Jeff Crane, a principal with the Andover Company. He and Brian Bruininks worked on the deal for the company.
Cabot acquired the asset in Federal Way for its commingled fund, Cabot Industrial Value Fund IV. This is a commingled fund where the manager was targeting a total capital raise of around $650 million. One of the lead investors in the fund with a $100 million commitment was the New York State Teachers Retirement System.
Cabot has a national investment scope for Fund IV. Seattle remains one of its targeted markets. The investment strategy for the commingled fund is to buy existing warehouse/distribution properties and invest some equity into new development projects. Within a few years of investing, funds will distribute around 8 percent annually from income received.
Cabot is known as a manager to have completed small investments on its industrial deals. The average size deal for the real estate manager since 2002 has been in the area of $13 million.
Cabot currently manages an industrial portfolio in the greater Seattle market totaling close to 500,000 square feet. Some of the markets in the region where it is active include the Kent Valley, Puyallup, Sumner and Tacoma. The company has a 170,000 square foot development project in Puyallup under construction. This property is projected to be finished by March or April of this year.
