LIBERTY BUYS 23M SF OFFICE, INDUSTRIAL PORTFOLIO FOR $1.5B
MALVERN, PA. — Liberty Property Trust (NYSE: LRY) has agreed to acquire the operating partnership of Cabot Industrial Value Fund III, which is operated by Boston-based private real estate investment firm CabotProperties Inc. The nearly $1.5 billion transaction will add 177 properties scattered across the country, or approximately 23 million square feet, to its portfolio. The deal is expected to close this October.
As of May 31, 93.3 percent of the purchased space was leased to a total of 436 tenants.
“This acquisition is a compelling opportunity to increase both the size of Liberty's industrial platform and its scope,” says William Hankowsky, chairman and CEO of Liberty. “With approximately 58 percent of this portfolio located in Liberty's current markets and approximately 21 percent in the target markets of Atlanta, Dallas and Southern California, we are expanding into three of the top five national industrial markets.”
Liberty’s existing market in Chicago will see the largest increase in square footage, as more than 3 million square feet will be added in the Second City. Atlanta will be the largest of the new markets, with properties there totaling 2.2 million square feet.
“With one transaction, we significantly deepen our current industrial presence while extending our footprint to a national level,” says Hankowsky.
The purchase price entails the assumption of approximately $230 million in outstanding mortgage debt with a weighted average maturity of seven years with the remainder payable in cash. Total cost of the transaction is expected to reach $1.5 billion, related net transaction expenses and anticipated capital expenditures included.
Liberty has secured a $1.27 billion senior unsecured bridge loan in concert with this transaction. The trust intends to permanently finance the deal with a combination of debt and equity financing plus an expected $150 million from the disposal of certain operating properties.
Citigroup and Goldman, Sachs & Co. served as Liberty’s financial advisors in the deal. A REIT serving customers in both the United States and United Kingdom, the trust specializes in development, acquisition, ownership and management of office and industrial properties.
Liberty's stock price closed at $38.21 per share yesterday, up from $36.29 per share at this time last year.
— John McCurdy