Industrial Boom Continues with $3.2B Exeter Portfolio

By Gail Kalinoski, Contributing Editor

7280 Oakley Industrial Blvd, Atlanta, Ga.

With two weeks left in 2015, another major industrial deal has closed, this one for $3.15 billion, putting it well behind the top industrial portfolio sale of $8.1 billion but still large enough to make it one of the top transactions of the year.

A joint venture of Henley Holding Co., a wholly-owned subsidiary of the Abu Dhabi Investment Authority, and the Public Sector Pension Investment Board, one of Canada’s largest pension investment managers, closed Thursday on the acquisition of a 58 million-square-foot industrial portfolio held by investment funds owned and managed by Exeter Property Group. Exeter, a Plymouth Meeting, Pa., real estate investment firm specializing in industrial properties, also invested in the JV and will continue to manage the purchased properties.

Located in 25 key distribution markets throughout the United States, the portfolio consists of 209 assets, most of which are modern bulk warehouses that support e-commerce and traditional retailers, suppliers and wholesalers. It was marketed by Eastdil Secured and CBRE.

“We are very pleased to have concluded the sale of this exceptional portfolio of industrial properties on behalf of our investors,” Ward Fitzgerald, Exeter CEO, said in a prepared statement. “ADIA and PSP Investments are two of the most highly-regarded international real estate investors, and we are thrilled to work with our new partners in the continued successful management of these properties as well as in other opportunities in the United States and abroad.”

Tom Arnold, Head of Americas Real Estate at ADIA, said the firm had great confidence in the U.S. industrial sector, particularly those that were serving the logistical needs of traditional and omnichannel businesses.

“The Exeter portfolio fits well into our long-term real estate investment strategy, and we are pleased to have both Exeter and PSP Investments as our partners,” Arnold stated.

Neil Cunningham, senior vice president and Global Head of Real Estate Investments at PSP Investments, also said the acquisition was consistent with its strategy of making “direct investments in sizeable, core industrial assets in key markets alongside experienced partners who share our long-term investment horizon.”

Cunningham called the Exeter portfolio an “attractive and complex investment opportunity.”

Foreign investors like ADIA and PSP Investments have been aggressively buying U.S. commercial real estate this past year as they look for more stable investments. Many of them have been attracted to the U.S. industrial market, which has had steady growth in recent years. A year ago, Blackstone was the first owner to announce a blockbuster industrial deal, agreeing to sell the 117 million-square-foot IndCor Properties portfolio to GIC, Singapore’s sovereign wealth fund, for $8.1 billion. GIC quickly brought on Global Logistics Properties, Ltd., a Singapore-based provider of global logistics facilities, as a partner selling it a 55 percent stake in the IndCor portfolio. The deal closed earlier this year.

Global Logistics Properties further expanded its reach in the sector by buying the 58 million- square-foot Industrial Income Trust portfolio for $4.5 billion, making it the second largest owner of U.S. industrial properties behind Prologis, which made news of its own in April. The firm said then it agreed to buy the industrial assets and operating platform of KTR Capital Partners for $5.9 billion. Joining Prologis in the deal, which closed in early June, was Norges Bank Investment Management, manager of the Norwegian Government Pension Fund Global, which took a 45 percent stake. The KTR assets included an approximately 60 million-square-foot operating platform, 3.6 million square feet of developments in progress and a land bank with the build-out potential of 6.7 million square feet.

Exeter, which has $5.3 billion in assets under management, was represented by Fried, Frank, Harris, Shriver & Jacobson L.L.P. and Silverang, Donohoe, Rosenzweig & Haltzman, L.L.C. ADIA was represented by Kirkland & Ellis L.L.P. and PSP Investments was represented by Davies Ward Phillips & Vineberg L.L.P. and Torys L.L.P.