Global Logistic in US$4.55b warehouse deal, making it 2nd-largest owner of US industrial real estate

Global Logistic Properties Ltd., whose biggest shareholder is Singapore sovereign wealth fund GIC, agreed to buy more than 200 warehouses from Industrial Income Trust Inc. for US$4.55 billion.
Global Logistic Properties Ltd., whose biggest shareholder is Singapore sovereign wealth fund GIC, agreed to buy more than 200 warehouses from Industrial Income Trust Inc. for US$4.55 billion. PHOTO: BLOOMBERG

SEATTLE (BLOOMBERG) - Global Logistic Properties Ltd., whose biggest shareholder is Singapore sovereign wealth fund GIC, agreed to buy more than 200 warehouses from Industrial Income Trust Inc. for US$4.55 billion.

The deal will make it the second-largest owner of US industrial real estate.

In its second American acquisition this year, Singapore-listed GLP will purchase assets that comprise 58 million square feet (5.4 million square metres) in 20 major markets, including Los Angeles, Washington and Pennsylvania, GLP said in a statement on Wednesday.

The deal will increase GLP's US assets by 50 per cent to 173 million square feet, and the company will surpass Duke Realty Corp. to be the country's second-biggest owner of industrial real estate, after Prologis Inc.

GLP said it plans to provide US$1.9 billion of equity for the purchase with cash on hand and existing credit lines.

The transaction is being done at a capitalization rate of 5.6 per cent, the company said. Cap rates are a measure of investment yield used by real estate companies.

US warehouses are attracting investors as Web commerce helps drive demand for the storing and transporting of goods. Prologis in April teamed with Norway's sovereign wealth fund for a US$5.9 billion purchase of US industrial properties and related assets.

GLP said it expects to own 100 per cent of the assets when the deal with Industrial Income Trust closes, expected by Nov. 16, and reduce its stake to 10 per cent by April by selling part of its interest to institutional investors. The company will continue to operate the properties.

The warehouses being acquired are 93 per cent leased on average, and have a weighted average lease expiration of almost five and a half years, GLP said.

GLP entered the US warehouse market in February, with the US$8.1 billion purchase of IndCor Properties Inc. from Blackstone Group. The deal was done jointly with Singapore sovereign wealth fund GIC, GLP's largest shareholder.

While industrial vacancies are at their lowest in at least 15 years, that has yet to translate into "consistently large" rent growth as the supply of new buildings grows, Bradley Doremus, an associate at property-research firm Reis Inc., said in a July 15 report.

Vacancies at US warehouse and distribution centers fell to 10.8 per cent in the second quarter from 11.3 percent a year earlier, while rents after landlord discounts rose 2.5 per cent, according to Reis.