Prologis Completes $920 Million US Industrial Portfolio Sale
July 15, 2021 | James Sprow | Blue Vault
Affiliates of industrial real estate investment trust Prologis Inc. closed their approximately $920 million sale of 48 industrial properties across 13 U.S. markets to Black Creek Industrial REIT IV Inc.
The portfolio, which totals about 8.3 million square feet, is 96.4% occupied.
On July 1, a subsidiary of Ares Management Corp. assumed the management of Black Creek Industrial as part of an agreement to acquire Black Creek Group LLC’s U.S. real estate investment advisory and distribution business.
Key Logistics Portfolio
On July 14, 2021, BCI IV Portfolio Real Estate Holdco LLC, a Delaware limited liability company (“Black Creek Holdco”), an indirect wholly owned subsidiary of Black Creek Industrial REIT IV Inc. (the “Company”), acquired a 100% fee interest in 48 industrial buildings totaling approximately 8.3 million square feet on approximately 480.7 acres (the “Key Logistics Portfolio”) pursuant to an Agreement and Plan of Merger (the “Merger Agreement”), by and between Black Creek Holdco, Prologis Targeted U.S. Logistics Fund, L.P., a Delaware limited partnership (“USLF”), Prologis USLV Operating Partnership, L.P., a Delaware limited partnership (“USLV”), and Prologis USLV SubREIT 1, LLC, a Delaware limited liability company (“USLV SubREIT”, and together with USLF and USLV, the “Sellers”). The Key Logistics Portfolio is located in 13 geographic markets throughout the United States and is 96.4% occupied by 83 customers with a weighted-average remaining lease term (based on square feet) of approximately 3.4 years. One customer in the Key Logistics Portfolio individually leases more than 10% of the total rentable area, as described below:
● Radial, Inc., a multinational e-commerce company, leases 1.0 million square feet, or approximately 11.6% of the portfolio’s rentable area, under one lease that expires in 2026 with two options to extend the term of the lease for five years each. The annual base rent under the leases is currently $3.6 million and is subject to annual rent escalations of approximately 2% in 2022, 2023, 2024, and 2025.
The total purchase price was $920.0 million, subject to customary prorations. The Sellers are not affiliated with the Company or its affiliates. The Company funded the acquisition using proceeds from the Company’s public offering and funds from its existing credit facility.
The Company, through BCI IV Operating Partnership LP (“BCI IV OP”), has a program under which it intends to raise capital in private placements exempt from registration under Section 506(b) of the Securities Act of 1933, as amended (the “Securities Act”) through the sale of beneficial interests in Delaware statutory trusts holding real properties (the “DST Program”). Following the closing, 12 of the 48 buildings in the Key Logistics Portfolio, totaling approximately 4.2 million square feet, were placed in one or more Delaware statutory trusts (“DST Properties”) and became a part of the Company’s DST Program. Pursuant to the terms of the DST Program, the interests in the DST Properties are owned by a taxable REIT subsidiary of BCI IV OP and will be sold to third party investors. The Company, through a subsidiary of BCI IV OP, holds long-term leasehold interests in the DST Properties pursuant to master leases that are fully guaranteed by BCI IV OP, while third-party investors will ultimately hold some or all of the interests in the DST Properties through their acquisition of beneficial interests in the Delaware statutory trusts.
Source: S&P Global Market Intelligence, SEC
