Stockbridge, NPS of Korea Close Blockbuster Deal
- Dec 04, 2020
Citing the rapid acceleration of e-commerce, Stockbridge and the National Pension Service of Korea have formed a joint venture to acquire core logistics properties in the U.S. In partnership with Stockbridge’s open-end core fund and an additional institutional investor, the new joint venture is acquiring a 23-asset, 14.3 million-square-foot portfolio of Class A logistics facilities—the largest transaction by value of industrial properties since the pandemic began.
Financial terms of the transaction and the seller of the properties were not disclosed. PGIM Real Estate announced it had provided a $365 million loan to Stockbridge. Nuveen Real Estate also provided financing, but the amount was not disclosed.
The portfolio covers 11 markets and includes recently completed and soon-to-be completed properties with a significant representation of major e-commerce tenants under long-term leases. The properties are fully leased and include the latest technology for logistics construction and are designed toward meeting increasingly faster e-commerce fulfillment and delivery times. Features include 36-foot and higher clear heights and ample parking.
Capitalizing on the shift to e-commerce
Scott Kim, head of the Real Estate Investment Division at NPS, said in a prepared statement the acquisition and industrial joint venture aligns with the pension fund’s strategy to capitalize on the shift to e-commerce. He noted NPS was able to underwrite the acquisition quickly and manage partner relationships successfully because of its local presence in New York. NPS is one of the largest pension funds in the world, with about $672 billion in assets under management as of Sept. 30. NPS has been actively investing in Manhattan office towers with major investments in joint ventures with SL Green Realty Corp. and Hines to redevelop One Madison Avenue and build One Vanderbilt Avenue.
Terry Fancher, Stockbridge executive managing director, said in prepared remarks the acquisition gave the San Francisco-based real estate investment management firm an exceptional way to tap into the rapid acceleration of e-commerce growth because of the COVID-19 pandemic. Fancher said it’s a trend they expect to continue and wanted to take advantage of the opportunity to quickly complete the transactions which he called “rare opportunities at scale.”
Bryan McDonnell, PGIM Real Estate’s head of U.S. debt and chair of global debt, said in a separate statement the best-in-class assets are mission-critical to the supply chain and are strategically located in close proximity to large population centers and labor pools. Stockbridge is an existing client, according to PGIM Real Estate.
Natalia Todorov, executive director at PGIM Real Estate, led the transactions on behalf of the firm along with Elizabeth Velazquez, executive director, originations. The Stockbridge team was led by Kristin Renaudin, chief financial officer, and Nicole Stagnaro, managing director and head of Opportunistic and Platform Transactions.
Stagnaro, in prepared remarks, said the portfolio was of extraordinary quality, pointing to the modern construction, long-term leases and high-credit and e-commerce tenant base. She stated it would be difficult to find better cash-flow visibility across private equity real estate today, particularly in a period of broad market uncertainty.
The transaction is Stockbridge’s third large-scale industrial portfolio acquisition in the past 16 months. Other purchases are an 8.7 million-square-foot portfolio in November 2019 and a 6.4 million-square-foot portfolio in August 2019. The firm has also made numerous single-asset industrial acquisitions this year. Combined with the most recent transaction, Stockbridge’s industrial footprint is on track to surpass 55 million square feet.
Several firms also played roles in the transaction: Eastdil Secured, debt placement and valuation advisors; Gibson, Dunn & Crutcher LLP and Clifford Chance US LLP, legal counsel; Jones Lang LaSalle, property management and valuation advisor; CBRE, Colliers International and Cushman & Wakefield, valuation advisors.
The assets are located across the U.S. in 11 major markets. They are:
- Atlanta: Pendergrass (1 million square feet), Union City (570,988 square feet), Austell, (148,952 and 139,886 square feet)
- Boston: Hudson, N.H. (1.1 million square feet and 1 million square feet)
- Chicago: Sturtevant, Wis., (307,850 square feet and 145,418 square feet)
- Cincinnati: Blue Ash, Ohio (534,943 square feet), Cincinnati, (123,200 square feet)
- Dallas: Balch Springs, Texas (145,303 square feet)
- Detroit: Romulus, Mich., (752,400 square feet, 516,760 square feet) and Warren, Mich., (295,510 square feet)
- Jacksonville, Fla.: Jacksonville (278,237 square feet)
- Memphis, Tenn.: Olive Branch, Miss. (1.1 million square feet)
- Pennsylvania: Imperial (1 million square feet) and Shoemakersville (1.2 million square feet; 336,000 square feet; 324,000 square feet)
- Southern California: Riverside (2 million square feet) and San Bernardino (1.1 million square feet).