MALVERN, PA-Liberty Property Trust will swallow the operating partnership of Cabot Industrial Value Fund III for a price of $1.475 billion.
When net transaction expenses and anticipated capital expenditures are added in, the total cost is expected to be $1.5 billion. Closing on the deal, which will add 23 million square feet to Liberty's industrial portfolio, is scheduled for October.
"This acquisition is a compelling opportunity to increase both the size of Liberty's industrial platform and its scope," said William P. Hankowsky, chairman and chief executive officer of Liberty.
"With approximately 58% of this portfolio located in Liberty's current markets and approximately 21% in the target markets of Atlanta, Dallas, and Southern California, we are expanding into three of the top five national industrial markets,” he said. “So with one transaction we significantly deepen our current industrial presence while extending our footprint to a national level."
Liberty has been on an aggressive expansion course for several years; in late 2011, it began speculative construction of a giant warehouse at the brownfield site of Bethlehem steel, with Hankowsky predicting the coming boom in demand.
About 10 million square feet of the Cabot properties is located in ten markets where Liberty does not currently have a presence. Approximately 13 million square feet is located in 14 of Liberty's existing 15 industrial markets, including Chicago, South Florida, Houston, New Jersey, Maryland and Central Pennsylvania.
The Cabot portfolio was 93.3% leased as of May 31 to 436 tenants.
The purchase price involves Liberty's assumption of approximately $230 million of outstanding mortgage debt, with a weighted average maturity of seven years and the remainder payable in cash.
Liberty has obtained a commitment for a $1.27 billion senior unsecured bridge loan. The company said it intends to permanently finance the transaction with a combination of debt and equity financing. Liberty also intends to dispose of several operating properties that are expected to generate about $150 million in proceeds.
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