Industrial Logistics Properties Trust is acquiring Monmouth Real Estate Investment Corporation for $4 billion.
Industrial Logistics Properties Trust (ILPT) Friday said that it had entered into a definitive agreement to acquire all of the outstanding shares of Monmouth Real Estate Investment Corporation (MNR, Monmouth) for $21.00 per share in an all-cash transaction, valued at approximately $4 billion, including committed MNR acquisitions, transaction costs and the assumption of $409 million of debt.
ILPT said the transaction adds 126 new, Class A, single tenant, net leased, e-commerce focused industrial properties to its existing portfolio and improves geographic and tenant diversity.
The portfolio contains over 26 million square feet of space, has a weighted average remaining lease term of approximately 8 years, is over 80% leased to investment grade rated tenants and generates annualized rental revenue of $169.4 million.
ILPT expects this transaction to be immediately accretive to normalized funds from operations, or FFO, per share.
“This transaction adds 126 high-quality industrial assets to ILPT’s portfolio and expands ILPT’s ability to benefit from ongoing strong fundamental tailwinds in the industrial sector. This accretive transaction more than doubles the properties in ILPT’s mainland portfolio and this scale is expected to expand ILPT’s growth opportunities and access to capital which we expect will drive cash flow growth and long-term value for our shareholders,” said John Murray, Chief Executive Officer of ILPT.
To finance this acquisition, ILPT expects to enter into a joint venture with one or more institutional investors for equity investments of between approximately $430 million and $1.3 billion.
”Accordingly, ILPT does not currently plan to issue common shares in connection with this transaction. ILPT plans to finance the balance of the $4.0 billion purchase with proceeds from new mortgage debt and the assumption of approximately $409 million of existing MNR mortgage debt. Depending on the ultimate size of the joint venture equity investments, ILPT may also use proceeds from the sale of up to approximately $1.6 billion of MNR properties to finance this transaction. Following the closing of the acquisition and execution of the financing plan described above, consolidated net debt to Adjusted EBITDAre is expected to be between 6 and 8 times at year end 2022. To ensure ILPT can finance the closing of this transaction, ILPT has secured commitments from lenders for a $4.0 billion bridge loan facility,” said the company.
The transaction is subject to customary closing conditions, including MNR shareholder approval, and is expected to close in the first half of 2022.
According to ILPT, certain highlights of the acquired portfolio include:
- 126 industrial and logistics properties with approximately 26.3 million rentable square feet.
- Geographically diverse portfolio across 32 states with an average age of approximately 9 years.
- 99.7% occupied with a weighted average lease term of approximately 8 years.
- Over 80% of annual rents come from investment grade tenants.
- Annualized rental revenue of $169.4 million as of September 30, 2021.
- Manageable near-term lease expirations average 6.4% of contractual rents per year over the next three years.