WPT Industrial REIT is contributing a portfolio of 13 US distribution and logistics properties worth approximately $370 million into a newly established joint venture with the Investment Management Corporation of Ontario.
WPT will retain a majority ownership interest in the portfolio and operate and maintain them on behalf of the JV.
Few details were provided about the JV and its planned activities . IMCO has about $11.6 billion in real estate assets under management in its $70.3 billion portfolio. A recent, related investment it made was in TorQuest Partners’ acquisition of VersaCold Logistics Services, one of Canada’s leading cold storage warehousing and food logistics companies. TorQuest partnered with IMCO on the deal.
The portfolio WPT is contributing includes approximately 4,750,000 square feet of gross leasable area that is 100% leased with a weighted average lease term of approximately 5.5 years. Its average tenant size is 317,000 square feet and it has an initial capitalization with debt-to-total-assets of 45%. The assets are located in Chicago, North New Jersey, Atlanta, Kansas City and one in St. Louis.
Based in Ontario, WPT Industrial focuses on distribution and logistics properties in the US. It indirectly owns or manages a 37.2 million square foot portfolio of 109 properties across 20 US states.
This transaction with IMCO allows it to recycle capital out of large, single-tenant properties in these markets while maintaining existing operational scale. It is generating $255 million in proceeds from the transaction.
“The formation of a new stabilized joint venture represents meaningful progress on our capital recycling initiative and underscores the REIT’s ability to attract and expand our relationships with strong institutional capital partners, said Scott Frederiksen, CEO of the REIT, in a prepared statement.
WPT made its move as the industrial market is growing increasingly expensive. In Q4 2020, industrial saw $11.9 billion in sales volume at an average price per square foot of $100 per square foot, which was an 18.2% increase year-over-year. Those were the strongest numbers since CommercialEdge began collecting industrial data.
Then, in January the average price per square foot for an industrial asset jumped to $145 per square foot nationally.
Other reports paint a similar picture. The warehouse/distribution space absorbed 35.4 million square feet in Q4, which was its highest mark since Q1 2019 when 70.7 million square feet were absorbed, according to Moody’s Analytics. In Q4, occupancy growth was 28.5 million square feet, while it was 24.2 million square feet in Q4 2019. The sector has gone more than a decade since it last experienced negative net absorption in 2010.