Industrial Logistics Properties Scoops Up $350M in Financing

The fixed-rate mortgage is secured by 11 industrial properties totaling about 8 million square feet.
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Industrial Logistics Properties Trust, of Newton, Mass., has closed on a $350 million mortgage loan that matures in November 2029. The loan is secured by an 11-property, 8 million-square-foot portfolio spanning eight states. The lenders were Morgan Stanley, UBS Investment Bank and Bank of America.

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The 10-year, non-amortizing loan carries a fixed interest rate of 3.33 percent, which is lower than the current borrowing cost on ILPT’s unsecured revolving credit facility. ILPT reportedly expects to use the proceeds of this loan to reduce outstanding borrowings under that $750 million credit facility.

ILPT’s cost basis in this portfolio of properties is $556.8 million, and as of Sept. 30, the weighted average remaining lease term (by annualized rental revenue) for these properties was 7.1 years. Occupancy was 100 percent. ILPT President & CEO John Murray said in a prepared statement that this mortgage increases the REIT’s fixed-rate debt to 79 percent of its total debt and extends the average maturity of the company’s debt to more than over 7.5 years. ILPT did not reply to Commercial Property Executive’s request for additional information.

Tremont Realty Advisors acted as ILPT’s advisor in this transaction, and Sullivan & Worcester LLP provided legal counsel.

An active buyer

In two transactions entered into last February, ILPT added about 12.9 million square feet to its national footprint. In the larger of the two, the REIT purchased 18 assets from Cole Office & Industrial REIT Inc. for a total price of $625.3 million, including the assumption of $57 million in debt. In the other deal, ILPT acquired an eight-property portfolio of industrial properties in the Indianapolis and Cincinnati metro areas for $280 million. That seller was not identified. Both portfolios reportedly were fully leased.

Though the U.S. industrial market’s fundamentals are still strong, and vacancy remains tight, net absorption has decelerated each quarter this year, in part at least because of a relative lack of product, according to a third-quarter report from Newmark Knight Frank. Year-over-year, average asking industrial rents were up 7.4 percent nationwide, to $7.40 per square foot. In the third quarter, three markets (Chicago, Nashville and Dallas) saw absorption of 3 million square feet or more, and two (Nashville and Las Vegas) had increases of occupied space of 1.5 percent.