NEWTON, Mass.--(BUSINESS WIRE)--Industrial Logistics Properties Trust (Nasdaq: ILPT) announced today that it has entered into an agreement with a large, top-tier global sovereign wealth fund to take a 39% equity interest in the existing joint venture of a select portfolio of 12 of ILPT’s mainland properties for approximately $108 million. The existing institutional investor in the joint venture will maintain its 39% equity interest and ILPT will own the remaining 22% equity interest in the joint venture. The new investor’s investment in the joint venture is at the same $680 million valuation as the existing institutional investor’s investment in the joint venture.
As a result of this transaction, ILPT expects that its leverage will be substantially reduced. ILPT plans to use the approximately $108 million of proceeds from this transaction to reduce outstanding borrowings under its $750 million unsecured revolving credit facility. In addition, ILPT will account for its 22% equity investment as an unconsolidated joint venture interest and $407 million of debt associated with the properties in the joint venture will no longer be recorded on ILPT’s consolidated balance sheet.
John Murray, President and Chief Executive Officer of ILPT, made the following statement regarding today’s announcement:
“We are pleased to add a new private capital partner to our joint venture, which we believe validates the strength of our real estate portfolio and further illustrates that demand for quality industrial and logistics assets like ours remains strong despite the economic challenges caused by the COVID-19 pandemic. This transaction also substantially reduces our leverage and better positions us for growth in the future. We look forward to both growing ILPT and this joint venture with the acquisition of industrial and logistics properties in the future.”
The joint venture is managed by The RMR Group LLC, the majority owned operating subsidiary of The RMR Group Inc. (Nasdaq: RMR) and the manager of ILPT. RMR is responsible for providing all aspects of business and property management services for more than 1,300 properties with over 93 million square feet of commercial office, industrial, medical office, life science and retail space.
About Industrial Logistics Properties Trust
Industrial Logistics Properties Trust is a real estate investment trust, or REIT, that owns and leases industrial and logistics properties throughout the United States. As of September 30, 2020, ILPT owned 301 properties with 43.8 million rentable square feet which are approximately 98.8% leased to 264 different tenants with a weighted average remaining lease term of approximately 9.0 years.
About The RMR Group Inc.
The RMR Group Inc. is a holding company, and substantially all of its business is conducted by its majority-owned subsidiary, The RMR Group LLC. The RMR Group LLC is an alternative asset manager that primarily provides management services to publicly traded REITs and real estate operating companies. As of September 30, 2020, The RMR Group LLC had $32.1 billion of assets under management, including over 2,100 properties, and employed over 600 real estate professionals in more than 30 offices throughout the United States; and the companies managed by The RMR Group LLC collectively had nearly 42,500 employees. The RMR Group Inc. is headquartered in Newton, Massachusetts.
WARNING CONCERNING FORWARD-LOOKING STATEMENTS
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other securities laws. These forward-looking statements are based upon ILPT’s present beliefs and expectations, but these statements and the implications of these statements are not guaranteed to occur and may not occur for various reasons, some of which are beyond ILPT’s control. For example:
- Mr. Murray states that the transaction validates the strength of ILPT’s real estate portfolio and further illustrates that demand for quality industrial and logistics assets like ILPT’s remains strong despite the economic challenges caused by the COVID-19 pandemic. This may imply that ILPT’s portfolio will remain strong and in demand in the future. However, property values change and may decline and demand for industrial assets may decrease. Further, the impact of the continued COVID-19 pandemic on ILPT may be worse than anticipated.
- Mr. Murray states that this transaction substantially reduces ILPT’s leverage, which may imply that ILPT’s leverage will be sustained at this reduced level. However, ILPT has a revolving credit facility under which it may borrow, repay and reborrow amounts and ILPT may seek to obtain additional debt financing in the future. As such, ILPT may not maintain the reduced leverage it achieved by completing this transaction.
- Mr. Murray’s statement in this press release that ILPT looks forward to both growing ILPT and this joint venture with the acquisition of industrial and logistics properties in the future may imply that ILPT and the joint venture will grow in the future. However, ILPT and the joint venture may not be able to identify suitable acquisitions and ILPT and the joint venture may not grow in the future.
The information contained in ILPT’s filings with the Securities and Exchange Commission, or SEC, including under the caption “Risk Factors” in ILPT’s periodic reports or incorporated therein, identifies important factors that could cause ILPT’s actual results to differ materially from those stated or implied by ILPT’s forward-looking statements. ILPT’s filings with the SEC are available at the SEC’s website at www.sec.gov.
You should not place undue reliance upon forward-looking statements.
Except as required by law, ILPT does not intend to update or change any forward-looking statements as a result of new information, future events or otherwise.
A Maryland Real Estate Investment Trust with transferable shares of beneficial interest listed on the Nasdaq.
No shareholder, Trustee or officer is personally liable for any act or obligation of the Trust.