Plymouth Industrial, Madison International Form $150M Equity JV

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Plymouth Industrial REIT Inc. has formed a $150 million equity joint venture with Madison International Realty to acquire value-add and opportunistic industrial properties in key markets. The partnership is eying the Memphis, Tenn., area for its first deal. Plymouth Industrial, of Boston, will own a 20 percent interest in the joint venture, while New York-based Madison will own an 80 percent interest.

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Plymouth will have day-to-day oversight of the joint venture, its subsidiaries and properties and will receive an annual asset management fee equal to 1 percent of the total equity contributed to the joint venture by the partners. The REIT will also have options to purchase properties out of the joint venture over time.

The joint venture’s initial investment is expected to be a 28-property portfolio of Class B industrial assets totaling 2.3 million square feet in metropolitan Memphis, Tenn. The planned transaction should close by the end of the year for $86 million. The acquisition is expected to be funded with secured financing of approximately 60 to 65 percent loan-to-value and with equity contributions from Plymouth and Madison based on their pro rata ownership of the joint venture.

Jeff Witherell, chairman & CEO of Plymouth, said in a prepared statement the additional capital will allow the REIT to expand its reach within key markets and scale its platform. Madison is one of Plymouth’s largest shareholders and has been very supportive of the firm’s growth plans, Witherell added.

Citing the positive supply and demand fundamentals and return potential, Ronald Dickerman, president of Madison International Realty, said in prepared remarks the new joint venture allows the firm to jointly target attractive industrial opportunities with its longtime partner Plymouth.

In December 2018, Plymouth closed on a $75 million investment from Madison that allowed for the simultaneous $97.1 million acquisition of Jacksonville Southside Business Park, a 1.1 million-square-foot portfolio of light industrial and flex facilities in Jacksonville, Fla. At that time, Plymouth sold 4,411,764 shares of its Series B Convertible Redeemable Preferred Stock to Madison at $17.00 per share. Kyle Torpey, a Madison director and member of the firm’s U.S. investments team, said there was participation in subsequent common equity follow-on offerings.

Earlier transactions

The equity joint venture announcement comes two weeks after Plymouth entered into a new $300 million unsecured credit facility, which consisted of a $200 million revolving credit facility and a $100 million term loan. The facility has an accordion feature that enables Plymouth to increase the total borrowing capacity under the credit facility and term loan up to an aggregate of $500 million, subject to certain conditions. The new credit facility reportedly provides expanded line capacity and greater capital structure with lower borrowing costs. Both replaced maturing financings.

In September, Plymouth purchased a total of three industrial properties. The REIT acquired two in-fill properties in St. Louis, totaling 566,408 square feet and a single property in Jacksonville for a total of $51.2 million. The sellers were not disclosed. All three Class B properties are fully leased.