Logistics real estate giant Prologis, Inc. has signed a definitive merger agreement to acquire Industrial Property Trust Inc. (IPT). Prologis will acquire IPT’s wholly owned real estate assets for approximately $3.99 billion in a cash transaction, including the assumption and repayment of debt. The transaction is expected to close by the first quarter of 2020 at the latest, following approval of IPT stockholders and other customary closing conditions.
“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,” said Eugene F. Reilly, chief investment officer, Prologis. “We expect to capture significant cost and revenue synergies, in addition to enhancing customer relationships and insights.”
The 37.5-million-square-foot operating portfolio comprises 236 properties, 96 percent of which are in existing Prologis markets. Specifically, the transaction expands the company’s position in Chicago, with approximately 3 million square feet of space, as well as in Southern California, the San Francisco Bay Area, Atlanta, Dallas, Seattle and New Jersey.
Morgan Stanley & Co. and Eastdil Secured are acting as financial advisors and CBRE is acting as real estate advisor to IPT. Hogan Lovells is acting as legal advisor to IPT while a team of Mayer Brown Chicago lawyers, David Malinger, Andrew Noreuil, Jeff Bruns and Michael Hermsen, are representing Prologis.
Following the closing, the company intends to hold the portfolio through either one or both of its U.S. co-investment ventures. The transaction is expected to be accretive to annual Core FFO by approximately $0.05-0.061 per share, on a stabilized basis. The transaction is not expected to have a meaningful impact on the company’s leverage. Further, Prologis does not expect to add any corporate overhead and, as a result, the transaction is expected to lower general and administrative expenses as a percentage of assets under management by approximately 4 percent.
“We have worked diligently to create a balance sheet that allows us to take advantage of opportunities such as this, and we remain committed to maintaining our financial strength,” said Thomas S. Olinger, chief financial officer, Prologis. “This accretive transaction advances our strategy of using our scale to grow earnings with no incremental overhead.”