Industrial real estate investment trust Prologis announced this week that it signed a merger agreement to acquire all real estate assets of the REIT and warehouse owner Industrial Property Trust (IPT) for $3.99 billion in a cash transaction that includes debt.
The transaction is expected to close in either the fourth quarter of this year or the first quarter of 2020.
The deal is subject to IPT stockholders’ approval and other traditional closing conditions.
Prologis, while based in San Francisco, is one of the largest industrial REITs in the country — it has a market capitalization of approximately $50 billion and a portfolio of 786 million square feet. Prologis also purchased DCT Industrial Trust last year for $8.5 billion, including debt, according to The Wall Street Journal. Prologis’ recent aggressive acquisition behavior is in part due to how e-commerce and same or next-day shipping has created strong demand for industrial real estate in logistics hubs close to large cities across the United States.
“We are off to an excellent start to the second half of the year as we’ve just entered into an agreement to acquire IPT,” Prologis Chairman and CEO Hamid R. Moghadam said in a release. “The acquisition of this high-quality portfolio will deliver additional shareholder value immediately upon close.”
IPT’s 37.5 million square foot operating portfolio comprises 238 properties — 96 percent of which are in existing Prologis markets. The deal is expected to expand Prologis’ position in southern California, the San Francisco Bay area, Chicago, Atlanta, Dallas, Seattle and New Jersey.
“This is a compelling opportunity to acquire a portfolio of excellent asset quality and submarket composition consistent with our U.S. investment strategy and footprint,” Prologis Chief Investment Officer Eugene F. Reilly said in a statement. “We expect to capture significant cost and revenue synergies, in addition to enhancing customer relationships and insights.”
The company intends to hold the portfolio through either one or both of its U.S. co-investment ventures after the deal is closed.
“We have worked diligently to create a balance sheet that allows us to take advantage of opportunities such as this, and we remain committed to maintaining our financial strength,” Prologis Chief Financial Officer Thomas S. Olinger said. “This accretive transaction advances our strategy of using our scale to grow earnings with no incremental overhead.”