Black Creek Explores $3.5 Billion Sale of Warehouse REIT
(Bloomberg) -- Black Creek Group LLC is exploring strategic options for Industrial Property Trust Inc., including a recapitalization or sale of the warehouse owner that could fetch more than $3.5 billion including debt, according to a person with knowledge of the matter.
The firm, which is working with advisers, has begun sounding out suitors for IPT, including real estate private equity firms, sovereign wealth and pension funds, according to the person, who asked not to be named because the matter is private. A Black Creek representative declined to comment on any plans for IPT, a nontraded real estate investment trust with 240 properties.
Black Creek had explored options for IPT last year, an effort that was ultimately canceled, in part due to other sizable transactions involving warehouse owners. Last May, Blackstone Group LP agreed to buy Gramercy Property Trust in a deal that closed in October. Ivanhoe Cambridge Inc., a unit of Caisse de Depot et Placement du Quebec, agreed to buy warehouse developer IDI Logistics from Brookfield Asset Management Inc. for about $3.5 billion and later sold half its stake to Oxford Properties Group, the real estate arm of Canadian pension fund OMERS.
The IPT portfolio, with an average age of 20 years, is 96 percent leased and has a total of 37.6 million square feet (3.5 million square meters). While tenants include Amazon.com Inc. and FedEx Corp., no single occupant accounts for more than 3 percent of IPT’s annualized base rent. Roughly 70 percent of the properties are designed for bulk warehouse use, while 30 percent are for so-called infill, or last mile, use, according to a document reviewed by Bloomberg.
IPT’s projected net operating income for 2020 is roughly $181 million and slated to grow at a compounded annual rate of 4.2 percent for the next four years, driven by increases in occupancy and rents, the documents show.
Industrial real estate remains in favor among institutional investors, in part because of the proliferation of e-commerce and restrained construction of new warehouses. Demand has exceeded supply for nine straight years, driving the vacancy rate to a historic low of 4.3 percent, according to a CBRE Group Inc. report published in December. Consumer expectations of faster delivery times has been favorable to last-mile warehouse owners, where rents have risen at a faster clip than traditional big-box facilities, CBRE said.
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