Global Logistic Properties, a warehouse owner part-owned by
Singapore's sovereign-wealth fund, said Tuesday it is acquiring
about 200 U.S. warehouses for $4.6 billion in one of the largest
real estate deals of the year.
The deal, which has been signed but not yet closed, marks a
further expansion of Global Logistic's foothold in U.S. industrial
property. Late last year, the company and GIC Pte. Ltd., the
sovereign-wealth fund, joined to buy IndCor Properties, another
large warehouse portfolio, from buyout firm Blackstone Group LP for
$8.1 billion.
This latest Global Logistic purchase would mark the
second-largest real estate acquisition of the year by dollar value.
The company is buying roughly 58 million square feet of space in 20
different U.S. markets from Industrial Income Trust, making GLP the
second-largest logistics property owner and operator in the U.S.,
with 173 million square feet of space under its control, according
to the company.
The acquisition follows Global Logistic's announcement last week
that it will start a $7 billion infrastructure investment fund to
cater to the demand for warehouse space in China.
Fueled by persistent low interest rates, institutional investors
are plowing their money into hard assets, especially in real
estate. So far this year, buyers have announced 246 real estate
deals with a combined value of $57 billion, compared with 197 deals
worth $32 billion at the same point last year, according to
Dealogic.
The industrial space has been particularly active. In April,
Prologis Inc., the world's largest industrial landlord, announced
it would buy KTR Capital Partners, a large warehouse owner, for
$5.9 billion. Prologis is the largest U.S. warehouse owner.
"Values have never been higher" in the industrial real estate
space, said Eric Frankel, an analyst with real-estate research firm
Green Street Advisors. "Fundamentals are in good shape, tenant
demand is very strong, and people are emboldened by that. People
are underwriting more aggressively and that means paying higher
prices."
Industrial real estate is currently trading at an average cap
rate, or yield, of 5.7%, according to Green Street. Cap rates, a
common measure of value in real estate, have been falling
consistently over the past few years in the warehouse sector, Green
Street says, a sign that property values are on the rise. The
Global Logistic deal would value the IIC portfolio at a yield of
5.6%, a slightly higher-than-average price for the warehouse
sector.
In a statement, Global Logistic Properties said it intends to
put IIT's portfolio into its fund management platform, a common
practice among large industrial landlords. Large investors like GIC
provide the money to buy assets, while operators like Global
Logistic use their platforms to manage the properties in return for
a fee.
Industrial Income Trust began in 2010 as a so-called nontraded
real-estate investment trust, a type of real-estate fund that
raises money through networks of financial advisers from small
individual investors, then typically sells the properties at a
higher price. Based in Denver, the company built its portfolio in
more than 100 separate transactions. Its warehouses were 93% leased
as of the end of June.
Write to Robbie Whelan at robbie.whelan@wsj.com
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