Industrial Deals Proliferate In Last Few Days

KKR is reportedly close to striking a deal to acquire 100 industrial properties valued at more than $800 million, according to Bloomberg, which bases its report on unknown sources. If it does materialize, it will be the latest in a series of industrial deals announced in the last few days.

According to Bloomberg, the portfolio, which includes assets in markets including Atlanta, Chicago, Dallas and Baltimore, is financed by about $700 million in commercial mortgage-backed securities by Barclays Plc.

Separately, this morning KKR reported that it had acquired two industrial distribution properties in Texas totaling approximately 1.8 million square feet for $171 million.

KKR is hardly alone. On Dec. 3, Stockbridge announced that it formed a joint venture with the National Pension Service of Korea to acquire core logistics properties in the US. In partnership with Stockbridge’s open-end core fund and an additional institutional investor, this venture has committed to acquire a 14.3-million square foot portfolio of Class A logistics facilities across the US. Financial terms of the transaction were not disclosed but according to the Los Angeles Times it was valued at $2 billion.

The Los Angeles Times reports that two of these properties are in the Inland Empire, Calif. Target is in discussions to lease one of these properties—a 2-million-square-foot warehouse. Another facility, a 1-million-square-foot center, is leased to Amazon. A source tells the paper that the seller is Hillwood Properties, which is a Texas company founded by Ross Perot Jr.

The portfolio, which has an average year built of 2020, includes recently completed and soon-to-be-completed properties, with a significant representation of major e-commerce tenants under long-term leases.

Also, on Dec. 3, Crow Holdings announced that it formed a joint venture with global real estate investment manager Allianz Real Estate, acting on behalf of several Allianz Group companies, through the direct sale of a 49% stake in a 19-asset, 6.1 million-square-foot US industrial portfolio developed by Crow Holdings.

The properties in the portfolio were constructed from the ground up by Crow Holdings beginning in 2014. The Wildlife Commerce Park anchors the portfolio, an 11-building, 3.8 million-square-foot development built on 220 acres with access to the Dallas-Fort Worth metroplex. The other properties are located in Chicago, Dallas, Houston and Southern California.

On Dec. 4th, Rexford Industrial Realty announced it had acquired an 18-asset industrial property portfolio for $154.6 million. The off-market transaction was funded with cash on hand.

Additionally, Colony Capital sold the Colony Bulk Industrial Portfolio for $400 million to an undisclosed buyer and Blackstone acquired 13 properties from Iron Mountain in a $358 million sale leaseback transaction.

The strong recent transaction volume in industrial should be no surprise given the sector’s recent performance. While other commercial real estate sectors have struggled during the COVID-19 pandemic, e-commerce has fueled strength in industrial, including a strong third quarter, according to JLL.

JLL said the logistics sector benefits from the massive shift in online buying, with increased demand from construction materials and building fixtures industries. Buoyed by this strong demand tenant, touring activity and move-ins strengthened relative to the beginning of the year, rents have continued to climb, annual absorption is on track to close at 200 million square feet and deliveries have hit an all-time high.