SAN FRANCISCO AND DENVER — Prologis Inc. (NYSE: PLD) has signed a definitive merger agreement to acquire Industrial Property Trust Inc. (IPT) in a deal valued just shy of $4 billion. IPT is an industrial real estate investment platform sponsored by Black Creek Group, a real estate investment manager and development firm based in Denver.
If approved by IPT’s shareholders, the overall transaction would span 236 properties located across 24 geographic areas. The roughly 37.5 million-square-foot portfolio is currently 97 percent leased.
About 96 percent of the affected properties are in markets where Prologis already has a presence. The transaction would expand the San Francisco-based firm’s holdings in Southern California, the Bay Area, Chicago, Atlanta, Dallas, Seattle and New Jersey.
“This is a compelling opportunity to acquire a portfolio of excellent asset quality and submarket composition consistent with our U.S. investment strategy and footprint,” says Eugene Reilly, chief investment officer of Prologis. “We expect to capture significant cost and revenue synergies.”
The merger will include 100 percent of IPT’s wholly owned real estate assets, but will exclude the firm’s minority ownership interests in two unconsolidated joint venture partnerships valued at approximately $295 million. Black Creek Group expects to determine the outcome for the two ventures in the next 30 days.
Prologis does not expect to add any corporate overhead, thus the transaction is expected to lower the firm’s corporate expenses as a percentage of assets under management by approximately 4 percent.
IPT’s board of directors has unanimously approved the merger. The transaction is expected to close in the fourth quarter, but no later than March 31, 2020, according to a letter from Black Creek Group to its stockholders.
According to Black Creek Group, each Class A and Class T share of IPT will automatically be converted into the right to receive a net adjusted amount in cash currently estimated to be approximately $12.18 per share.
Evan Zucker, principal, co-founder and managing partner of Black Creek Group, says that IPT represents the fourth full-cycle industrial portfolio that Black Creek Group has delivered in its 25-year history.
“We believe this transaction makes sense for our investors as we want to deliver shareholder returns that maximize the current economic environment,” adds Raj Dhanda, CEO of Black Creek Group. “Given the strength of the (industrial) sector, not only do we plan to continue to develop and acquire assets for other portfolios, but create products that make sense for investor needs and the market cycle.”
Morgan Stanley & Co. and Eastdil Secured are acting as financial advisors to IPT. CBRE is acting as the firm’s real estate advisor, and Hogan Lovells is acting as legal advisor.
Black Creek Group has nine offices across North America with more than 300 professionals. The firm has sponsored 24 investment platforms and has taken six platforms that span real estate asset classes full-cycle through either a sale or by going public on the New York Stock Exchange.
Map of IPT’s owned portfolio. Click on the image to see a larger version
According to Prologis, the acquisition will only include IPT’s industrial assets. IPT has six offices located in Denver, Southern California, Chicago, Dallas, New Jersey and Atlanta.
As of June 30, Prologis owned or had investments in properties and development projects expected to total approximately 786 million square feet in 19 countries. The company leases modern distribution facilities to a base of approximately 5,100 customers principally across two major categories: business-to-business and retail/online fulfillment.
The company’s stock price closed on Monday, July 15 at $80.25 per share, up from $65.04 a year ago.
— John Nelson