Colony Financial To Buy Cobalt Capital Partners For About $1.6 Bln

(RTTNews) - Real estate investment and finance company Colony Financial, Inc. (CLNY) said Wednesday that it has agreed to acquire Cobalt Capital Partners, the owner of 256 industrial properties in the U.S., for about $1.6 billion.

Cobalt Capital's portfolio of 256 primarily light industrial assets 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.

The company is a Dallas-based private equity firm that invests in light industrial properties in major metropolitan markets throughout the U.S. through its three private real estate investment trusts or REITs.

The transaction is expected to close in December 2014. Cobalt Capital's management team, led by Lewis Friedland, will be retained to run the day-to-day operations of the business, including acquisitions, asset and property management.

Colony Financial has arranged financing from GE Capital Real Estate equal to about 70 percent of the purchase price, with the balance of initial capital funded through equity.

The company expects the portfolio to achieve a stabilized unlevered net operating income yield of about 7 percent and produce an initial annualized return-on-equity of about 10 percent.

Thomas 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."

Lewis Friedland, Cobalt's founder and Managing Partner, said, "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 on the transaction.

In early November, Colony Financial and the parent company of its manager, Colony Capital LLC, said they have agreed in principle to substantially combine all of Colony Capital's real estate and investment management businesses as well as operations with Colony Financial.

The non-binding agreement in principle also contemplates that only Colony Capital's interests in Colony American Homes, which announced it has become a self-managed REIT, would not be included in the proposed transaction.

Colony Capital is a privately-held independent real estate investment company and registered investment advisor headquartered in Los Angeles, California and also founded in 1991 by Thomas Barrack, Jr.

The transaction is expected to close by the end of the first half of 2015. The companies expect that upon closing of the transaction, the combined company would be renamed Colony Capital, Inc.

CLNY closed Tuesday's trading at $24.57, up $0.04 on a volume of 1.50 million shares.