GLP has entered into a definitive agreement to acquire a $1.1bn US logistics portfolio from Hillwood Development Company, LLC (“Hillwood”). A $700m portfolio, which is 100% leased with a weighted average lease expiry of 9 years, is in the process of being acquired in December 2016. The remaining $400m development portfolio is to be acquired in phases upon completion and full lease-up.
GLP stated that Investor demand to partner with the company in the US logistics market is strong and it expects to sign with capital partners by initial closing. GLP will be the asset manager and expects to retain a stake of approximately 10% post-syndication.
The $1.1bn transaction is expected to be funded by $470m of equity and $635m of debt. GLP’s target 10% equity stake of $47m is expected to generate a 13% return-on-equity (including fees) in the first year of investment.
GLP expects to fund its equity commitment with cash on hand and existing credit facilities and has secured long-term, low-cost debt at a fixed rate.
Chuck Sullivan, President and Chief Operating Officer of GLP US, said, “The portfolio being acquired from Hillwood is one of the highest quality logistics real estate portfolios in the US. This transaction, which will be immediately accretive to GLP, demonstrates our ability to leverage our existing platform to pursue enhanced network benefits in the strongest US markets.”
The 15m sq ft (1.4m sq m) portfolio has a strong concentration in desirable locations expected to benefit strongly from the growth of e-commerce in the US. The transaction enlarges GLP’s US footprint to 187m sq ft (17m sq m), with the US representing 8% of GLP’s SFRS3 Net Asset Value.