CHICAGO — GLP, a global provider of logistics facilities, has entered into an agreement to acquire a $4.6 billion logistics portfolio from Industrial Income Trust (IIT). GLP intends to place the portfolio in its fund management platform.
The portfolio comprises 58 million square feet of in-fill logistics assets spread across 20 major markets. The largest markets include Los Angeles, Washington D.C. and Pennsylvania. The portfolio was 93 percent leased as of June 30, with a weighted average lease expiry of nearly 5.5 years. GLP is focused on increasing the lease ratio to 95 percent.
GLP expects to own 100 percent of the portfolio upon closing by Nov. 16 and pare down its stake to 10 percent by April 2016. The portfolio will be acquired at a 5.6 percent cap rate.
GLP’s target 10 percent equity stake of $190 million is expected to generate significant returns within the first year of investment, which includes the company’s share of operating results and fund management fees.
“This is an accretive opportunity for GLP that allows us to strengthen our U.S. market presence and growth prospects with minimal incremental overhead,” says Ming Mei, CEO of GLP. “The fund management platform is one of GLP’s main sources of capital to fund our growth.”
GLP’s initial equity commitment of $1.9 billion will be funded by cash on hand and existing credit facilities. The company has approximately $2.9 billion of committed long-term financing for the acquisition.
The transaction will enlarge GLP’s U.S. footprint by 50 percent to 173 million square feet, with GLP becoming the second-largest logistics property owner and operator in the U.S. within a year of market entry. GLP is also the largest provider of logistics facilities in China, Japan and Brazil. Subsequent to this transaction, GLP’s global portfolio will encompass more than 500 million square feet valued at $33 billion.
“This transaction complements our existing portfolio well, expanding GLP’s size and scale in the U.S.,” says Stephen Schutte, COO of GLP. “We feel particularly good about the quality and location of the facilities, which have an average building age of 15 years and a strong concentration in major distribution markets.”
— Haisten Willis