Singapore-based logistics fund manager GLP announced today it has agreed to acquire a $1.1 billion US logistics real estate portfolio from Dallas-based Hillwood Development Company.
The portfolio’s 32 assets, which total 15 million square feet across the US, will be purchased in two tranches at a going-in cap rate of 5.7 percent. The first tranche, which is expected to close in December, involves a $700 million portfolio of completed logistics properties comprising 10 million square feet of Class A space. The properties, which are 100 percent occupied and have an average age of three years, are located in Chicago, Dallas, Atlanta, Pennsylvania, Los Angeles, Cincinnati and Indianapolis. They could include the Braselton Commerce Center (pictured) in Atlanta and Laraway Crossing in Chicago.
The second tranche will involve a $400 million development portfolio representing five million square feet of Class A logistics facilities in the same markets as the initial portfolio. The development portfolio will be acquired in phases over the next 18 months as the assets are completed and fully leased.
“There aren’t many portfolios of this quality and size available in the market,” said Chuck Sullivan, president and chief operating officer of GLP US, in an interview with PERE.
The purchase would be the largest purely industrial real transaction so far this year, according to data provider Real Capital Analytics. The acquisition is expected to be funded with $470 million of equity and $635 million of debt. GLP is expected to retain a 10 percent equity stake of $47 million in the portfolio, which it is acquiring on behalf of its third US real estate fund, GLP US Income Partners III.
GLP previously has set up property vehicles with fund partners around large industrial acquisitions. For example, it formed GLP US Income Partners I in February 2015, following the $8.1 billion acquisition of IndCor, Blackstone’s US industrial real estate platform. In November, the firm launched GLP US Income Partners II, through which it purchased a $4.55 billion portfolio from Industrial Income Trust. GIC and Canada Pension Plan Investment Board, among others, backed the first fund, while China Life was one of the partners in GLP US Income Partners II.
Similarly, GLP is expected to launch its latest US real estate fund once investor commitments to the vehicle have been finalized. “There’s strong investor interest to partner with GLP in the US,” said Sullivan. Additional properties developed through joint ventures with local partners or smaller acquisitions could also be rolled into GLP US Income Partners III.
The portfolio being acquired is understood to be different from what Hillwood had put up for sale earlier this year, as GLP only agreed to buy properties in markets where it already has a strong presence. Hillwood reportedly had shopped a 25 million square foot industrial portfolio encompassing 63 properties in 12 US markets for $1.6 billion. GLP’s top 10 markets by leaseable area include Los Angeles, Pennsylvania, Dallas, Reno, Chicago, Atlanta, New Jersey, Washington, DC/Baltimore, Phoenix and the San Francisco Bay area.
With its latest US acquisition, GLP’s US portfolio will grow to 187 million square feet, with the country representing 8 percent of the company’s overall net asset value. The firm is the second-largest logistics owner in the US after Prologis and the largest in China, Japan and Brazil. GLP had a total of $38 billion of logistics facilities representing 560 million square feet across the four markets as of July 31.