EQT Exeter’s $6.8B Sale Tops Recent Industrial Deals

Image courtesy of EQT Exeter

Just weeks after Equus Capital Partners Ltd. paid $1.2 billion for a 7.3 million-square-foot, 74-property industrial portfolio in two Arizona markets, EQT Exeter has topped that deal with an even larger one by selling a 70.5 million-square-foot portfolio of 328 assets for $6.8 billion in one of the largest U.S. industrial transactions in history.

The blockbuster deal is the latest in a recent series of major transactions as the e-commerce boom has pushed the industrial sector into record sales territory. A new report from the Society of Industrial & Office Realtors and LightBox notes industrial sales this year could surpass the 2019 record of $120 billion. By mid-2021, industrial sales volume had reached almost $52 billion, and the average price per square foot had risen by nearly 25 percent year-over-year, to $120. Average rents increased by 5 percent to 7 percent, and even by double-digits in hot markets like Northern New Jersey and the Inland Empire. Vacancy rates in some of those markets are about 1 percent.

READ ALSO: SIOR: Industrial Sales to Surpass 2019 Record

The report stated demand was high for large logistics portfolios because they enable investors to scale up quickly. One example is Blackstone’s $3.1 billion acquisition of Toronto-based WPT Industrial REIT, which owned more than 100 logistics properties in 19 U.S. states. In another huge deal, Singapore-based Mapletree Investments announced in September it had acquired $3 billion in U.S. industrial assets in two transactions in July and September. The portfolios, located in core logistics hubs, totaled 141 assets across 28.4 million square feet and boosted Mapletree’s holdings at that time to 355 facilities valued at nearly $7 billion in assets under management.

EQT Exeter, which closed on the massive sale on behalf of its private real estate funds, EQT Exeter Industrial Value Fund IV and related investment vehicles, did not disclose the name of the buyer. The Wall Street Journal reported the newly formed global partnership was led by an unidentified Asian sovereign-wealth fund.

The portfolio, which is comprised primarily of logistics properties serving the supply chains of major corporations, has assets in the top five U.S. distribution hubs of New York, Dallas, Atlanta, Chicago and Los Angeles as well as the key e-commerce and air cargo hubs of Indianapolis; Columbus, Ohio; Louisville, Ky., and Memphis, Tenn. Many of the properties are used for “big box” regional distribution, e-commerce fulfillment and last-mile distribution.

Building the Portfolio

EQT AB acquired Exeter Property Group earlier this year in a $1.9 billion deal. Exeter had more than $10 billion of industrial, residential and other assets under management at the time of the acquisition. Since then, EQT Exeter has made numerous office and industrial acquisitions in markets including Phoenix, Indianapolis and Philadelphia. The portfolio sold this week was assembled through more than 100 transactions executed over three years. The firm also developed 15 million square feet of the portfolio with an additional 7 million square feet under construction. EQT Exeter added significant value to the portfolio, raising occupancy from 55 percent to 95 percent.

READ ALSO: Industrial Real Estate Is Booming, With No End in Sight

The new ownership group has engaged EQT Exeter to continue operating and managing the properties. In a statement provided to Commercial Property Executive, EQT Exeter said certain bidders seek EQT Exeter to manage the assets as part of their bid if they are not in a position to manage themselves.

“This ensures they get continuation of operation of the assets and given the highly integrated and skilled EQT Exeter operating team, they believe we are best to add value to the assets over the longer hold period,” the company stated.

Ward Fitzgerald, partner & head of EQT Exeter, called the transaction a transformational deal for the investors in the U.S. industrial funds.

Fried, Frank, Harris, Shriver & Jacobson LLP advised QT Exeter. Eastdil Secured served as the procuring broker in the transaction.