- Deal for $700 million of leased buildings to close this year
- Properties under-development to be acquired over 18 months
Global Logistic Properties Ltd., the second-largest owner of U.S. industrial real estate, agreed to buy $1.1 billion of warehouses from Hillwood Development Co.
Singapore-based GLP, which owns $38 billion of industrial buildings globally, expects to complete a $700 million deal for fully leased properties in December, the company said in a statement Monday. The remainder of the buildings are in development and will be acquired in phases over the next 18 months, Chuck Sullivan, president and chief operating officer of GLP’s U.S. division, said in an interview.
“It’s a very high-quality portfolio,” Sullivan said. “We like the nature of the logistics business that the tenants are in.”
Industrial-property landlords are benefiting as the growth of online shopping fuels demand for distribution and warehouse space. The occupancy rate at U.S. industrial buildings is at the highest level since 2000, data from Green Street Advisors LLC show. E-commerce is expanding about 15 percent a year, according to the real estate research firm.
GLP has been pushing deeper into U.S. industrial real estate, with deals including the purchase last year of more than 200 warehouses from Industrial Income Trust Inc. for $4.55 billion. It plans to seek partners for the transaction with Hillwood, a Dallas-based firm founded by H. Ross Perot Jr., and said it expects to retain a 10 percent stake in the properties while continuing to manage them.
The acquisition will be funded by $470 million of equity and $635 million of debt, GLP said. The transaction enlarges GLP’s U.S. footprint to 187 million square feet (17 million square meters), with the U.S. contributing 8 percent of GLP’s net asset value according to Singapore accounting standards.
The acquisition is GLP’s third major U.S. deal in the past two years. GLP entered the U.S. warehouse market in February last year with the $8.1 billion purchase of IndCor Properties Inc. from Blackstone Group LP. That was followed by the Industrial Income deal in July last year.
GLP shares fell 1.3 percent to S$1.835 at 9:07 a.m. in Singapore trading, taking this year’s decline to 15 percent, even as the FTSE Strait Times Real Estate Index has gained 3 percent.