LOS ANGELES--(BUSINESS WIRE)--Colony Financial, Inc. (NYSE:CLNY) today announced that it has entered into definitive agreements to acquire Cobalt Capital Partners and its highly diversified portfolio of 256 primarily light industrial assets for approximately $1.6 billion. The portfolio is leased to over 600 tenants and comprises over 30 million square feet across 16 major U.S. markets, with significant concentrations in Atlanta, Dallas and Chicago. Cobalt’s management team, led by Lewis D. Friedland, is being retained to run the day-to-day operations of the business, including acquisitions, asset and property management. The transaction is expected to close in December 2014.
Colony Financial has arranged financing from GE Capital Real Estate equal to approximately 70% of purchase price, with the balance of initial capital funded through equity. The portfolio is expected to achieve a stabilized unlevered net operating income yield of approximately 7% and produce an initial annualized return-on-equity of approximately 10%.
Thomas J. Barrack, Jr., Executive Chairman of Colony Financial, said, “Cobalt is a highly coveted portfolio of strategically located assets, in high growth markets, well positioned to benefit from a strengthening economy in the next phase of the business cycle. Moreover, it features strong rental rates and a well-diversified tenant base, underscored by low capital requirements. The leadership brought by Lew Friedland perfectly complements our company’s own institutional-quality asset and portfolio management, which has long excelled in the industrial sector through value-added investing. We believe this portfolio will generate very attractive risk-adjusted returns which we will seek to aggressively enhance through additional acquisitions.
“This is an important step for us,” Barrack continued. “We have consistently signaled that Colony Financial can achieve additional growth and diversification by launching focused platforms that will grow foundational returns and pursue expansion through bolt-on acquisitions. A market leading presence in the light industrial space is one important manifestation of this strategy.”
Colony Financial CEO Richard Saltzman said, “As the U.S. economy continues to improve and accelerate, we believe investing in equity platforms with embedded growth opportunities is one of the best uses of our capital. Furthermore, we expect the capitalization for this acquisition will ultimately include substantial third party co-investment capital and is an excellent example of how Colony Financial can benefit under its contemplated new structure as recently announced on November 4th.”
Lew Friedland, Cobalt's founder and Managing Partner, added, “Our entire team is excited to join Colony, one of the industry’s premier real estate companies, during this historic period of its evolution. Over the last ten years, we've grown Cobalt, along with our partner USAA Real Estate Company, into a leader in the industrial property market, and we now look forward to expanding our business as part of the Colony family.”
Willkie Farr & Gallagher LLP served as legal advisor to Colony Financial, Inc.
About Colony Financial, Inc.
Colony Financial, Inc. is a real estate investment and finance company that is focused on acquiring, originating and managing a diversified portfolio of real estate-related debt and equity investments at attractive risk-adjusted returns. Our investment portfolio and target assets are primarily composed of interests in: (i) real estate and real estate-related debt, including loans acquired at a discount to par in the secondary market and new originations; and (ii) real estate equity, including single family homes held as rental investment properties. Secondary debt purchases may include performing, sub-performing or non-performing loans (including loan-to-own strategies). The Company has elected to be taxed as a real estate investment trust, or REIT, for U.S. federal income tax purposes.
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