Stockholm-headquartered global investment firm EQT has agreed to buy US-based Exeter Property Group for $1.9 bn (€1.6 bn), broadening the private equity giant's reach in real estate markets across Europe and North America.
EQT will pay about $800 mln in new shares plus $1,070 mln in cash, which includes the refinancing of $300 mln of existing Exeter debt.
Christian Sinding, CEO and managing partner of EQT said: 'We are excited to accelerate our strategy of building a globally-scaled real estate platform and diversifying the firm within private markets by joining forces with Exeter.
'We have a high bar for strategic M&A, and Exeter is one of the few opportunities we have identified which clears and well surpasses it.'
Majority owned by Ward Fitzgerald and other members of the Exeter management team, Exeter was founded in 2006 and is focused on acquiring, developing and managing logistics/industrial, life science/office and residential properties mainly across the US and Europe. It currently has some $10 bn assets under management.
Growth ambitions
EQT said that the transaction was part of the group's strategic growth ambitions within real estate, and would create a scaled, thematic investment platform across Europe and North America.
With 37 local deal offices, Exeter is expected to report approximately $135 mln in revenues and approximately $80 mln in Ebitda in 2020.
'With its value-creation-focused investment approach, one of the strongest track-records in value-add real estate globally, and importantly, a people-and-performance-centric culture, we are all well-aligned. I am delighted to welcome Ward and the Exeter team to the EQT family, and we are looking forward to working together to take EQT Exeter to the next level,' Sinding added.
Adding a scaled franchise alongside EQT’s private equity and infrastructure strategies strengthens the firm’s position in North America, an important strategic region for EQT as a whole, the firm said. Exeter also has around 90 existing fund investors.
EQT said it would seek further territorial expansion via the Exeter deal, describing the firm's 'established track-record' as 'based on a formula that seeks to be repeatable and scalable on a global basis, including in Asia-Pacific and Latin America, where Exeter has started to establish a foothold in logistics/ industrials'.
Property priorities
EQT launched its property arm, EQT Real Estate, in 2015. It currently holds around 10 investments across select European markets.
Lennart Blecher, head of EQT real assets and deputy managing partner said: 'Scaling EQT’s real estate platform has been a key priority for EQT real assets.
'The combination of Exeter and EQT’s existing real estate business is highly complementary and creates a leader in thematic value-add real estate investments, allowing EQT to scale up local execution while also adding a prolific single asset deal platform.
'Exeter is a hidden gem with very strong performance due to a clear operational mindset. We believe this is synergistic for both parties, with EQT able to bring multiple benefits to the Exeter business with the strength of our industry and client relationships and our future-proofed operating platform.'
EQT will acquire 100% of the Exeter management company and 25% of the right to carried interest in selected existing Exeter funds (including Exeter US Industrial Value Fund V). In addition, EQT will be entitled to 35% of the carried interest of future funds.
Commented Ward Fitzgerald, CEO and founder of Exeter: 'EQT is a fantastic strategic and cultural fit for our business. We share a similar philosophy and investment approach, and we have a complementary global platform which can accelerate the growth of opportunities that we make available to both current and future clients.
'For our day-to-day activities, it will be business as usual. We will continue to be fully focused on driving returns by utilizing our unique local execution of small and mid-cap acquisitions, adhering to our real estate solutions ethic to our over 1,200 corporate client/tenants and directly performing our own leasing, property management and development.
'We are excited about the opportunity ahead of us to become more of a global leader in real estate by teaming with EQT.'
JP Morgan acted as financial adviser to EQT in relation to the transaction, while Kirkland & Ellis and Vinge acted as legal counsel. Berkshire Global Advisors acted as financial adviser to Exeter, and Goodwin Proctor acted as legal counsel.
