Oxford Properties is buying a $2.2bn (€1.9bn) US industrial real estate portfolio from KKR, a deal that progresses the Canadian investor’s plan to build a large scale industrial business.
The C$70bn (€47.4bn) property arm of Canadian pension fund OMERS said it has agreed to buy the 14.5m sqft infill and light industrial portfolio consisting of 149 high-quality distribution buildings.
The buildings are located across 12 major industrial US markets, including the Inland Empire, Dallas, Atlanta, Phoenix, Chicago, Houston, Tampa, Orlando, San Diego and the Baltimore Washington corridor.
Ankit Bhatt, VP of Investments at Oxford Properties, said high quality, infill, consumption-driven industrial portfolios of scale trade infrequently, so this transaction is an “important next step for Oxford to build a large scale industrial business in the US”.
“Growing our US industrial business is one of Oxford’s highest conviction global investment strategies as we continue to build, buy and invest in the physical infrastructure that serves the digital economy.
“The acquisition serves as a launchpad for Oxford’s light industrial business which perfectly complements our big box development platform, IDI Logistics. We believe scale will become an important differentiator for industrial real estate operators, and we continue to pursue opportunities in the US light industrial sector.”
Chad Remis, EVP of North America at Oxford Properties, said: “Across the globe, we are building, buying and growing world class industrial business in service of our global capital allocation priorities.
“As a result of this transaction, and recent activity in the sector, we are rapidly closing in our stated goal to have one-third of our global equity deployed into the industrial asset class.”
In January 2019, Oxford acquired IDI Logistics alongside fellow Canadian investor Ivanhoé Cambridge for $3.5bn.
Last year, the global real estate investor became a significant investor in the US-based Lineage Logistics. Oxford was a cornerstone investor in the initial public offering of ESR Cayman, which invests in Asia-Pacific logistics;, and follow-on investments have made it one of the largest institutional investors in the company.
In January this year, it announced it had agreed to acquire M7 Real Estate, a pan European logistics investment and asset manager.
Remis said having previously been a mezzanine lender on the portfolio acquired from KKR, “we have a high degree of conviction on the growth potential of these assets.
“It also demonstrates the power of Oxford’s fully integrated Credit business to help drive future investment synergies while generating attractive returns.”
Roger Morales, partner and head of real estate acquisitions at KKR, said: “Four years ago, we set out to create a large stabilised portfolio that would benefit from secular changes in the logistics sector largely driven by e-commerce and consumer preference changes.
“Given the highly fragmented asset class, the strategy included the creation of a best-in-class operating platform and a targeted investment effort focused on growing cities and key distribution nodes in the US”
Following the completion of the sale of the portfolio, KKR will continue to own over 20m sqft of industrial property across major metropolitan areas in the US
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