A Prologis holding. Photo from Prologis.
DENVER and SAN FRANCISCO – Prologis and Denver-based Black Creek Group have reached an agreement under which Prologis will purchase Black Creek's Industrial Property Trust investment platform for $ 3.99 billion in cash.
The deal includes 236 properties in 24 geographic areas, or in other words: 37.5 million square feet of industrial interest, currently 96% leased. The deal does not include IPT's minority stake in its two unconsolidated joint venture partnerships. The IPT Board of Directors has approved the transaction.
According to Eugene F. Reilly, chief investment officer, Prologis believes the transaction will generate significant cost and revenue synergies. In particular, the REIT's position in Southern California, the San Francisco Bay Area, Chicago, Atlanta, Dallas, Seattle and New Jersey will be expanded. Upon closing, Prologis intends to hold the portfolio through one or both of its US co-investment companies. In addition, Prologis assumes there will be no additional overhead costs for the company. As a result, the transaction is expected to reduce general and administrative expenses as a percentage of assets under management by approximately 4%.
"We have worked diligently to draw up a balance sheet that will enable us to take advantage of such opportunities, and we continue to strive to maintain our financial strength," said CFO Thomas S. Olinger in prepared comments. "This successful transaction drives our strategy of using our scale to increase bottom line without additional effort."
This transaction is also the most recent sale of a real estate platform by the Black Creek Group. In its 25-year history, the company has sponsored 24 investment platforms and divested six that were populated with real estate assets through either a liquidity event or an IPO on the New York Stock Exchange.
Morgan Stanley & Co. and Eastdil Secured are serving as financial advisor to Industrial Property Trust Inc. CBRE, Inc. is serving as real estate advisor to IPT. Hogan Lovells is acting as legal advisor to IPT.