Madison International Realty Seeds Plymouth Industrial REIT with $75M Stock Buy
The private placement is expected to close in mid December 2018 in conjunction with the closing of a previously announced portfolio acquisition in Jacksonville, FL.
BOSTON—New York City-based Madison International Realty Holdings, LLC has agreed to invest $75 million in Plymouth Industrial RET, Inc. in a stock purchase transaction.
Plymouth Industrial REIT, which is headquartered in Boston, has agreed to sell Madison 4,411,764 shares of its Series B Convertible Redeemable Preferred Stock at a price of $17.00 per share, or $75-million aggregate consideration. The private placement is expected to close in mid-December 2018 in conjunction with the closing of a previously announced portfolio acquisition in Jacksonville, FL.
Plymouth Industrial expects to use the anticipated net proceeds from the private placement to repay a $31.2-million term loan with KeyBank that bears interest at a rate of 700 basis points over LIBOR and matures in August 2021; to partially fund the firm’s expected purchase of a 1.1 million-square-foot light industrial and flex portfolio in Jacksonville for $97.1 million. Proceeds from Madison’s stock buy will also be used for working capital and other corporate expenses, including closing costs.
The shares of Series B Convertible Redeemable Preferred Stock are convertible into shares of the company’s common stock, at the option of the holders, commencing on Jan. 1, 2022. Prior to the receipt of stockholder approval, such conversion into shares of common stock is limited to the aggregate of the 19.99% limit under applicable NYSE American rules.
Jeff Witherell, chairman and CEO of Plymouth Industrial REIT, says, “In our efforts to source attractive long-term capital, we have been able to partner with an experienced institutional real estate investor who understands the significant growth opportunities available to us. Madison also recognizes the inherent value we have created in our platform and the clear benefit to our cash flows in 2019 through accretive deployment of capital for both new growth opportunities such as the Jacksonville acquisition and the payoff of our last remaining high-coupon debt. This transaction will result in a vastly improved balance sheet poised for long-term growth.”
Ronald Dickerman, president of Madison International Realty, adds, “We have been impressed with the depth of the Plymouth team and their experience and positioning in highly attractive industrial markets. Madison toured the majority of Plymouth’s properties, including the portfolio under contract in Jacksonville, and we are confident this strategic investment is transformative to Plymouth’s growth trajectory and balance sheet. We believe Plymouth fits well with our investment strategy and is a compelling play in the desirable industrial sector.”
The annual cash dividend on each share of Series B Convertible Redeemable Preferred Stock is 3.25%, or $0.5525 per share, for the period from the closing of the private placement through Dec. 31, 2019, and is payable when, as and if declared by the company’s Board of Directors, quarterly in cash on January 15, April 15, July 15 and October 15 of each year, commencing on January 15, 2019. The annual cash rate increases to 3.50% in year two; 3.75% in year three; 4.00% in year four; 6.50% in year five; and 12.00% in year six.
Sandler O’Neill + Partners served as an advisor to Plymouth Industrial on the strategic investment.
In October, 2018, Plymouth Industrial REIT, Inc. reported it intended to purchase approximately 1.5 million square feet of industrial space in Ohio for nearly $52 million.