Prologis and NBIM buy KTR Capital for $5.9 billion

The San Francisco-based industrial real estate developer, in partnership with Norway’s sovereign wealth fund, has agreed to acquire the New York-based industrial property owner.

Prologis, the San Francisco-based industrial real estate developer, in partnership with Norges Bank Investment Management (NBIM), has agreed to acquire KTR Capital Partners for $5.9 billion.

The deal to acquire the real estate assets and the operating platform of the New York-based industrial property owner has been made via a joint venture partnership between the firm and NBIM, manager of the $890 billion Norwegian wealth fund. NBIM holds a 45 percent stake in the venture, Prologis US Logistics Venture.

KTR Capital Partners operates a 60 million square feet portfolio comprising 322 properties concentrated largely in California, New Jersey, Chicago, South Florida and Texas. The acquisition also includes 3.6 million square feet of development-in-progress and a land bank, which has a build-out potential of 6.8 million square feet.

“It is rare to have the opportunity to acquire a portfolio of such high asset quality, customer profile and market composition that is so consistent with our own, said Hamid Moghadam, chairman and chief executive officer of Prologis. “ I have known KTR’s leadership for 15 years and have always considered them to be astute investors and one of our toughest competitors in the US.”

The purchase price of $5.9 billion is said to include the assumption of approximately $700 million of secured mortgage debt and the issuance of up to $230 million of limited partnership units to KTR.

In January last year, the Prologis formed the $1 billion joint venture with NBIM to invest in industrial properties in the US. As part of the deal, NBIM acquired the interest in a 12.8 million square foot stabilized portfolio of industrial and logistic properties owned by Prologis for $480 million. The portfolio consists of 66 assets located in nine US markets, including southern California, Pennsylvania, the San Francisco Bay Area, New Jersey, Las Vegas, Chicago, Seattle, Atlanta and Miami. During the launch of the partnership, the two firms had indicated that they would also seek to make additional investments in the US over time through the venture.

Prologis also operates another joint venture with NBIM, a €2.4 billion partnership in Europe that was formed in 2012.

The latest acquisition comes a few months after the Singapore-based Global Logistic Properties, a formidable competitor of Prologis, forayed into the US market via GIC Private’s $8.1 billion acquisition of the majority share of the IndCor business, owned by Blackstone. GLP, originally formed via the takeover of Prologis’ China and Japan assets, committed 55 percent of the equity to acquire the 117 million square feet of logistics space across the US.

As of March 2015, Prologis had close to 594 million square feet in industrial property investments in 21 countries.