Global Logistic Properties (GLP) has entered into a definitive agreement to acquire a $4.55bn portfolio of US logistics facilities from Industrial Income Trust, a real estate investment trust. GLP intends to inject the portfolio into its fund management platform.
GLP expects to own 100% of the portfolio upon closing by November 16, 2015, and pare down its stake to 10% by April 2016. GLP claims that demand from institutional investors to invest in its US logistics real estate is strong and the company states that it is already involved in negotiations with several new and existing capital partners.
The portfolio is to be acquired at a 5.6% capitalization rate. GLP’s target 10% equity stake of $190m is expected to generate returns within the first year of investment. This includes GLP’s share of operating results and fund management fees.
Ming Mei, Chief Executive Officer of GLP said, “This is an accretive opportunity for GLP that allows us to strengthen our US market presence and growth prospects with minimal incremental overhead. The fund management platform is one of GLP’s main sources of capital to fund our growth. The fund syndication offering for our first US income fund was significantly oversubscribed. Building on the positive momentum, we remain confident of injecting this portfolio into our fund management platform by April 2016.”
GLP’s initial equity commitment of $1.9bn will be funded by cash on hand and existing credit facilities. GLP has approximately US$2.9bn of committed long-term financing for the acquisition. Post this transaction, the US would represent 6% of GLP’s net asset value.
The portfolio comprises 58m sq ft of in-fill logistics assets. The largest markets include Los Angeles, Metro D.C. and Pennsylvania. The portfolio was 93% leased as of June 30, 2015, with a weighted average lease expiry of nearly 5.5 years. GLP plans to increase the lease ratio to 95%. The transaction will enlarge GLP’s total US footprint by 50% to 173m sq ft.
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