SAN FRANCISCO—Prologis and Norges Bank Investment Management have partnered to acquire the real estate assets of KTR Capital Partners for $5.9 billion. The properties will be acquired by Prologis US Logistics Venture, a 55-45 JV between it and the Norwegian government pension fund.
The two companies are acquiring a portfolio that encompasses 60 million square foot and is comprised of 322 properties. The properties are very complementary to Prologis' existing holdings, the REIT says, enhancing in particular its footprint Southern California, New Jersey, Chicago, South Florida, Seattle and Dallas. The acquisition also includes 3.6 million square feet of development-in-progress and a land bank with a build-out potential of 6.8 million square feet.
"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 of Prologis, in a prepared statement.
The transaction will deliver accretive returns to Prologis shareholders, Moghadam added. The deal also strengthens its partnership with Norges, "which will now exceed $11 billion on two continents," he said.
The $5.9 billion transaction 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 to KTR.
The transaction is expected to be accretive to forecasted annual core funds from operations by 14 cents per share, or a 7% increase from the midpoint of Prologis' 2015 guidance.
To help fund the transaction, Prologis has secured a $1 billion bridge facility from Morgan Stanley Senior Funding.
The transaction is anticipated to close in the next 30 to 60 days, subject to customary closing conditions.
Prologis has made its share of blockbuster acquisitions in the past, but its activity in recent months has been fairly routine. For Q1 it just reported that it acquired $140.9 million in properties with a stabilized capitalization rate of 6.8%. During that same period it sold $464.7 million at a 3.6% cap rate.
GlobeSt.com placed a call to Prologis after hours about this transaction. We will update the story accordingly.
Mayer Brown partners Michael Murray, Jason Wagenmaker, Michael Hermsen, David Malinger and Jeff Bruns represented Prologis.
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Erika Morphy
Erika Morphy has been writing about commercial real estate at GlobeSt.com for more than ten years, covering the capital markets, the Mid-Atlantic region and national topics. She's a nerd so favorite examples of the former include accounting standards, Basel III and what Congress is brewing.
