ADIA, PSP to close on $3bn US industrial deal – exclusive

With the transaction, the seller, Exeter Property Group, exits most of the investments from its first and second funds.

Exeter Property Group is said to be closing next week on the sale of a massive US industrial portfolio to Abu Dhabi Investment Authority and PSP Investments for $3 billion, according to people familiar with the matter. The portfolio comprises some 55 million square feet of industrial real estate properties across the country.

The properties are understood to primarily consist of stabilized investments from Exeter’s first value-add fund, Exeter Industrial Value Fund I, as well as stabilized investments from Exeter Industrial Value Fund II and the firm’s non-fund vehicles. The Plymouth Meeting, Pennsylvania-based real estate investment manager had acquired $820 million of industrial real estate from 2007 to 2011 on behalf of Fund I and $1.8 billion in assets during 2011 to 2014. Both funds are currently in their asset management and realization stages.

PERE understands that the properties in the portfolio will be rolled over into a new core vehicle that will continue to be managed by Exeter. The firm will maintain a small stake in the assets but the vast majority of the interest will be held by ADIA and PSP. The core vehicle, however, will be unrelated to Exeter’s second industrial core fund, Exeter Core Industrial Club Fund II, which the firm is currently marketing.

The sale of the portfolio to ADIA and PSP, which are understood to have not previously invested in Exeter’s funds, will signal an exit for many of the firm’s existing investors, which include the Pennsylvania Public School Employees’ Retirement System, New York State Teachers’ Retirement System, the New Jersey Division of Investment, Siguler Guff and GIC Private Limited.

The firm is said to have revealed to its limited partners at its investor meeting in May that a handful of potential buyers – which include both domestic and foreign investors – had bid on the assets, which were put on the market at the beginning of the year. Exeter had aimed to complete the sale by the end of the year, people said.

ADIA and PSP have both been seeking to increase their presence in US industrial real estate. In March, the two institutional investors closed on the acquisition of a 23 property, 14.3 million square foot warehouse and logistics portfolio from USAA Real Estate for $725 million.

A number of other giant US industrial portfolio sales have closed this year, including Global Logistic Properties (GLP) and GIC Private’s acquisition of The Blackstone Group’s IndCor platform for $8 billion; Prologis and Norges Bank Investment Management’s takeover of KTR Capital Partners for $5.9 billion and GLP’s purchase of a 58 million square foot US industrial portfolio from Industrial Income Trust for $4.55 billion.