GLP Grows US Presence with $1.1B Buy
- Sep 14, 2016
Chicago—GLP, a Singapore-based provider of logistics facilities, is making its third industrial acquisition in the U.S. with plans to purchase a $1.1 billion portfolio from Hillwood Development Co. in several phases starting later this year.
The first part of the deal is expected to close in December with the purchase of a $700 million portfolio. The remaining $400 million development portfolio will be acquired in phases upon completion and lease-up.
The addition of the 15 million-square-foot Hillwood portfolio will solidify GLP’s position as the second largest logistics property owner in the U.S., behind San Francisco-based Prologis.
GLP expects to have capital partners by the initial closing, retaining a stake of about 10 percent after the syndication. The firm will also be the asset manager of the portfolio, which has properties in the Chicago, Los Angeles, Dallas, Atlanta, Cincinnati, Indianapolis and Pennsylvania markets.
“The portfolio being acquired from Hillwood is one of the highest quality logistics real estate portfolios in the U.S.,” Chuck Sullivan, president & COO of GLP US, said in a prepared statement. “This transaction, which will be immediately accretive to GLP, demonstrates our ability to leverage our existing platform to pursue enhanced network benefits in the strongest U.S. markets.”
The $1.1 billion transaction will be split into $470 million of equity and $635 million of debt. GLP said it expects to fund its equity commitment with cash on hand and existing credit facilities, adding that it has secured a low-term, low-cost debt at a fixed rate which locks in attractive returns.
The portfolio is being acquired from Dallas-based Hillwood, a premier development firm controlled by Ross Perot Jr. that is best known for its largest project—the 18,000-acre master-planned mixed-use community of AllianceTexas in North Texas. Hillwood also develops and acquires industrial properties across North America and Europe, has developed more than 109 million square feet of industrial space and has land holdings providing 90 million square feet of future development. Last week, Hillwood announced it was beginning construction on Joliet Logistics Park, a 992,640-square-foot distribution center in Joliet, Ill., that will be the biggest speculative development in the Chicago market. Laraway Crossing Business Park, also in Joliet, is one of the industrial properties included in the GLP deal.
The Chicago market, at 24 percent, has the most leased square footage in the GLP-Hillwood deal, followed by Dallas at 23 percent. Atlanta, Pennsylvania and Los Angeles round out the top five markets by leased square footage in the planned transactions, according to a GLP investors’ presentation. GLP also noted that online retail represents 42 percent of the businesses that lease space in the portfolio followed by retail, 19 percent; food and beverage, 12 percent; and home improvement at 11 percent. The five largest customers by leased area are Amazon, Starbucks, NFI, Williams Sonoma and Wayfair. Other top customers leasing space in the portfolio to be acquired are Whirlpool, Home Depot and Fed Ex.
The acquisition will boost GLP’s U.S. footprint to 187 million square feet. GLP entered the U.S. industrial market in December 2014, when it took a 55 percent stake in a deal with GIC, Singapore’s sovereign wealth fund, to buy IndCor Properties from Blackstone for $8.1 billion. The firm followed up in July 2015 with a $4.6 billion purchase of a 58 million-square-foot industrial portfolio from Industrial Income Trust, a Denver-based REIT. Those two deals pushed GLP into second place behind Prologis with 173 million square feet of industrial properties in the U.S. It was one of the biggest M&A deals of 2015. In an exclusive interview with Commercial Property Executive in August 2015, Stephen Schutte, GLP’s chief operating officer, said the firm was attracted to the U.S. logistics real estate market because it has “been experiencing solid growth,” pointing to five consecutive years, at that time, of positive absorption.
Image courtesy of GLP US