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Oaktree takes majority stake in US industrial portfolio

The Los Angeles-based investment management firm has purchased the mezzanine debt on a 26-property portfolio valued at $337 million and taken control of the assets via deed-in-lieu of foreclosure.


Oaktree Capital Management has taken control of a portfolio of 26 industrial properties via deed-in-lieu of foreclosure.

According to data provider Real Capital Analytics, Oaktree purchased the mezzanine debt on the portfolio, known as the National Industrial Portfolio, from Citigroup. Rather than face the possibility of foreclosure, the original owners of the portfolio – Hackman Capital, Calare Properties and KBS Real Estate Investment Trust – decided to recapitalise the properties and turn them over to Oaktree via deed-in-lieu of foreclosure.

Representatives from Oaktree and the original owners declined to disclose the value of the recapitalisation, but RCA values the portfolio at $337 million for the purposes of the transaction. The parties involved also declined to reveal how much of a stake Oaktree now owns in the portfolio other than saying that the Los Angeles-based investment management firm is the majority owner. Hackman Capital and Calare Properties will retain minority stakes and continue to manage the portfolio.

John Brady, global head of real estate at Oaktree, said in a statement: “Capital will be infused to fund building improvements, including several redevelopment projects, which will enhance our leasing efforts across the portfolio.” He added that these improvements also will be done to build the portfolio’s value.

With more than 11 million square feet of rentable space, the bulk of the properties in the National Industrial Portfolio are located in key New England distribution markets, although the portfolio also includes properties in New York, Pennsylvania, Colorado and Texas. Among the portfolio's current tenants are Lego, Home Depot, Staples, Coca-Cola, Kraft, Regency Transportation, the US Postal Service and Macy's.

Last year, the National Industrial Portfolio gained more than 2.6 million square feet in new and renewed leases. “We plan to continue leasing the properties aggressively across the country, and redevelopments currently underway in Massachusetts, New Hampshire and Texas will further enhance our product offering,” said Michael Hackman, chief executive officer of Hackman Capital.