Industrial Logistics Properties Trust Announces $680 Million Joint Venture for up to 12 of its Mainland Properties
Industrial Logistics Properties Trust (Nasdaq: ILPT) announced that it has entered into agreements related to a $680 million joint venture with an Asian institutional investor for a select portfolio of 12 of ILPT’s mainland properties.
The investor will contribute approximately $108 million for a 39% equity interest in the joint venture and ILPT will own the remaining 61% equity interest in the joint venture. ILPT closed the joint venture with 11 properties and the investor will initially contribute approximately $82 million. The joint venture also assumed $350 million of existing secured debt on the portfolio. A twelfth property and $57 million of additional associated debt is expected to be contributed later, subject to certain conditions.
ILPT expects to use the proceeds from this transaction to reduce outstanding borrowings under its $750 million unsecured revolving credit facility.
The 12 industrial properties contain an aggregate 9.2 million square feet and are located in nine states. As of September 30, 2019, these properties were 100% leased for a weighted average remaining lease term (by annualized rental income) of 7.6 years.
John Murray, President and Chief Executive Officer of ILPT, made the following statement about today’s announcement:
“Completion of this joint venture transaction underscores the value of our mainland portfolio, reduces leverage and establishes a private capital partner for possible future growth at ILPT. The majority of the properties in this transaction were acquired in 2019 as part of two portfolio acquisitions and less than a year later the JV equity interest in the 12 property portfolio is being sold at a 5.5% cap rate based on full year 2019 actual cash NOI. Using these proceeds to reduce our debt will lower our reported net debt to annualized EBITDA ratio by approximately 0.6x. We are excited to have created a vehicle that may be able to raise and deploy additional private capital and to begin this venture with a well funded institutional investor that can help us fuel future value for ILPT’s shareholders.”
The list of properties included in the venture portfolio is as follows:
|5500 SE Delaware Avenue, Ankeny, IA||The Toro Company|
|945 Monument Drive, Lebanon, IN||Subaru of America|
|2150 Stanley Road, Plainfield, IN||Siemens Corporation and MD Logistics|
|2801 Airwest Boulevard, Plainfield, IN||Whirlpool Corporation|
|4237-4255 Anson Boulevard, Whitestown, IN||Amazon.com|
|20 Logistics Boulevard, Walton, KY||Cummins, Inc.|
|16101 Queens Court, Upper Marlboro, MD||La-Z-Boy|
|5148 North Hanley Road, St. Louis, MO||SKF|
|1800 Union Airpark Boulevard, Union, OH||Proctor & Gamble|
|5 Logistics Drive, Carlisle, PA||Polaris Industries, Inc.|
|5000 Commerce Way, Petersburg, VA||Amazon.com|
|3350 Laurel Ridge Avenue, Ruskin, FL *||Amazon.com|
|* Property expected to be contributed to the joint venture at a later date.|
ILPT will continue to control these properties. Accordingly, ILPT expects to consolidate the operating results of this joint venture in its financial statements and expects to account for the investor’s minority equity interest in the joint venture as a non-controlling interest for financial reporting purposes.
Industrial Logistics Properties Trust is a real estate investment trust, or REIT, that owns and leases industrial and logistics properties throughout the United States. ILPT is managed by the operating subsidiary of The RMR Group Inc. (Nasdaq: RMR), an alternative asset management company that is headquartered in Newton, MA.
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