The $5.9-billion deal includes KTR’s real estate assets and operating platform.
Industrial real estate company Prologis, Inc. has agreed to acquire the real estate assets and operating platform of KTR Capital Partners and its affiliates for $5.9 billion. According to a statement from Prologis, the portfolio comprises 322 properties under KTR’s three co-investment funds totaling 60 million square feet.
The acquisition, expected to close in the next 30-60 days subject to customary conditions, will be carried out by Prologis U.S. Logistics Venture, a consolidated joint venture with Prologis and Norges Bank Investment Management, manager of the Norwegian Government Pension Fund Global. The total $5.9 billion price tag includes the assumption of approximately $700 million of secured mortgage debt and the issuance of up to $230 million of common limited partnership units in Prologis, L.P. to KTR.
The company said the deal “aligns with Prologis’ investment strategy with approximately 95 percent overlap with its existing U.S. portfolio,” specifically enhancing its position in Southern California, New Jersey, Chicago, South Florida, Seattle and Dallas.
The portfolio also includes 3.6 million square feet of properties currently under development and lands with an additional 6.8 million square feet of potential build-out.
“It is rare to have the opportunity to acquire a portfolio of such high asset quality, customer profile and market composition that is so consistent with our own,” said Hamid Moghadam, chairman and CEO, Prologis. “I have known KTR’s leadership for 15 years and have always considered them to be astute investors and one of our toughest competitors in the U.S.
“This transaction will deliver accretive returns to our shareholders and will enhance our important and successful partnership with NBIM, which will now exceed $11 billion on two continents,” added Moghadam.
Prologis expects the transaction to be accretive to forecasted annual core funds from operations by approximately $0.14 per share, on a stabilized basis, which represents a 7 percent increase from the midpoint of the company’s 2015 guidance. These estimates are made on a leverage-neutral basis over the long term and include the effects from anticipated funding and capitalization costs, according to Prologis.
Morgan Stanley Senior Funding, Inc. has agreed to provide Prologis with a $1.0-billion bridge facility for the transaction, which will provide “ample capacity while maintaining significant liquidity on its credit facilities,” the company said.
In addition, the company expects the acquisition to lower general and administrative expenses as a percentage of assets under management by approximately 12 percent and increase its U.S. dollar equity exposure to 93 percent.
Chief Financial Officer Tom Olinger said of the deal, “We remain committed to maintaining our strong balance sheet, which will continue to provide us with the flexibility to capture market opportunities across the business cycle. This highly accretive transaction advances our strategy of using our scale to grow with minimal incremental overhead and demonstrates the unique appeal and the strength of our currency through our OP unit structure.”
Headquartered at Pier 1 in San Francisco, Calif., Prologis, Inc. owns or has investments in properties and development projects totaling approximately 594 million square feet in 21 countries. The company leases modern distribution facilities to more than 4,700 customers, including third-party logistics providers, transportation companies, retailers and manufacturers.
New York City-based KTR Capital Partners has 89 employees operating in eight offices across the United States, combining “the investment acumen and financial sophistication of an institutional asset manager with the real estate knowledge and entrepreneurial spirit of a local operator,” according to the company’s website.
Prologis acquires KTR Capital Partners
