Prologis completes divestiture of Reno industrial portfolio
San Francisco-based Prologis last week completed sale of 64 industrial and distribution properties in Reno totaling 9.5 million square feet to affiliates of Blackstone Real Estate Partners VII of New York.
Prologis had acquired the portfolio of assets in 2007 from DP Industrial, a joint venture of Dermody Properties and CalSTERS, the California State Teachers Retirement System. That sale, close to the peak of the real estate boom, still remains the region’s largest industrial transaction valued at $1.85 billion. When it purchased the properties, Prologis established the North American Industrial Fund III in an 80/20 partnership with Lehman Brothers and eventually increased the portfolio to 82 properties totaling 17.7 million square feet.
Prologis increased its staff in Reno to lease and manage the properties, but the timing for its decision to expand its holdings in the area couldn’t have been worse. The national recession severely trimmed industrial occupancy in northern Nevada in subsequent years and slashed the value of industrial properties in the region. Blackstone acquired the Reno portfolio and additional properties in Las Vegas and Pennsylvania for a reported $960 million. Blackstone Group currently owns 1 million square feet of industrial assets in Reno and Sparks and with the increase its portfolio to 10.5 million square feet Blackstone becomes the largest industrial property owner in northern Nevada.
Mike Curless, chief investment officer for Prologis, says the Reno properties no longer fit into the company’s investment management business. Blackstone will operate the Reno properties through its Chicago-based warehouse management company, IndCor Properties.
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