Asian Investor Enters $680M JV to Acquire US Industrial Assets

5 Logistics Drive in Carlisle, Pa. Image courtesy of Industrial Logistics Properties Trust

The network of investors has created another connection for Industrial Logistics Properties Trust. The company has sold a 39 percent stake of its 12-property industrial portfolio to an Asian institutional investor, creating a $680 million joint venture. While ILPT will retain the majority equity of 61 percent, the investor will contribute approximately $108 million for its 39 percent stake. The joint venture also assumed $350 million of the portfolio’s existing secured debt.

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According to ILPT, the investor will initially contribute $82 million for 11 properties, while a 12th property and $57 million of additional associated debt will be contributed later this month. The 12-property portfolio includes 9.2 million square feet of industrial space throughout Iowa, Indiana, Kentucky, Maryland, Missouri, Ohio, Pennsylvania, Virginia and Florida. The portfolio is also 100 percent leased, with a weighted average remaining lease term of 7.6 years. Major tenants include Subaru of America, Whirlpool Corp., Procter & Gamble and Amazon, which occupies three properties in the portfolio.

2150 Stanley Road in Plainfield, Ind. Image courtesy of Industrial Logistics Properties Trust

John Murray, ILPT’s president & CEO, told Commercial Property Executive that the company knew of the Asian investor through a venture with another REIT that was managed by The RMR Group, which also manages ILPT. Murray, who is also executive vice president of The RMR Group, also told CPE that the Asian investor introduced them to another large institutional investor, which could open the door for more growth.

Murray added in prepared remarks that the majority of these properties were acquired in 2019 as part of two portfolio acquisitions. He added in the prepared statement that the portfolio was selling the 39 percent joint venture equity at a 5.5 percent cap rate in less than a year after the acquisition.

ILPT’S revolving credit

ILPT will still control the properties and will put the proceeds from bringing in a joint venture partner toward its $750 million unsecured revolving credit facility. According to ILPT, the transaction will reduce the company’s reported net debt to annualized EBITDA ratio by approximately 0.6x.

In October, ILPT also secured a $350 million mortgage loan to reduce outstanding borrowings under that credit facility. And in February 2019, the REIT acquired more than 12.9 million square feet of industrial space for $905 million through two separate agreements.