SAN FRANCISCO AND NEW YORK — Prologis Inc. (NYSE: PLD), a global owner and developer of industrial real estate, has signed definitive agreements to acquire the real estate assets and operating platform of KTR Capital Partners (KTR) and its affiliates for a total purchase price of $5.9 billion. Prologis has obtained a commitment from Morgan Stanley Senior Funding Inc. to provide a $1 billion bridge loan for the transaction.
The 60 million-square-foot operating portfolio comprises 322 industrial properties in markets such as Southern California, New Jersey, Chicago, South Florida, Seattle and Dallas. The acquisition also includes 3.6 million square feet of industrial properties that are currently under construction and a well-located land bank with a build-out potential of 6.8 million square feet.
The properties comprise KTR’s three co-investment funds and will be acquired by Prologis U.S. Logistics Venture (USLV), a 55-45 consolidated joint venture with Norges Bank Investment Management (NBIM), manager of the Norwegian Government Pension Fund Global.
“It is rare to have the opportunity to acquire a portfolio of such high asset quality, customer profile and market composition that is so consistent with our own,” says Hamid Moghadam, chairman and CEO of Prologis. “I have known KTR’s leadership for 15 years and have always considered them to be astute investors and one of our toughest competitors in the U.S. This transaction will deliver accretive returns to our shareholders and will enhance our important and successful partnership with NBIM, which will now exceed $11 billion on two continents.”
The acquisition includes the assumption of approximately $700 million of secured mortgage debt and the issuance of up to $230 million of common limited partnership units in Prologis LP to KTR.
“We remain committed to maintaining our strong balance sheet, which will continue to provide us with the flexibility to capture market opportunities across the business cycle,” says Tom Olinger, chief financial officer of Prologis. “This highly accretive transaction advances our strategy of using our scale to grow with minimal incremental overhead and demonstrates the unique appeal and the strength of our currency through our OP unit structure.”
The transaction is anticipated to close in the next 30 to 60 days, according to Prologis.
“We are extremely pleased to acquire KTR’s outstanding property portfolio and customer roster,” says Eugene Reilly, CEO of Prologis Americas.
New York-based KTR Capital Partners was established in 2004 as an investment, development and operating company focused exclusively on the industrial property sector in North America.
As of March 31, 2015, San Francisco-based Prologis owned or had investments in properties and development projects totaling approximately 594 million square feet in 21 countries. The company leases modern distribution facilities to more than 4,700 customers, including third-party logistics providers, transportation companies, retailers and manufacturers.
The stock price for Prologis closed Friday, April 17 at $42.88 per share, up from $41.39 per share at this time last year.
— John Nelson