NEWTON, Mass.– Industrial Logistics Properties Trust announced that it has completed its acquisition of Monmouth Real Estate Investment Corporation (NYSE: MNR) for $21.00 per share in an all-cash transaction, valued at approximately $4.0 billion, including committed MNR acquisitions, transaction costs and the assumption of approximately $323 million of debt.
This transaction was approved by MNR’s shareholders on February 17, 2022 and closed on February 25, 2022. The MNR portfolio includes 126 Class A, single tenant, net leased, e-commerce focused industrial properties containing over 26 million square feet of space with a weighted average lease term of approximately eight years that was 99.7% occupied and over 80.0% leased to investment grade rated tenants as of February 25, 2022. ILPT expects the MNR portfolio to generate annualized rental revenues of approximately $175 million in 2022 and expects the transaction to be accretive to normalized funds from operations, or Normalized FFO, per share.
Simultaneous with closing the MNR transaction, ILPT entered into a new joint venture with an institutional investor for 95 MNR properties that are expected to generate approximately $137 million in annualized net operating income, or NOI, in 2022. The investor contributed approximately $587 million for a 39% non-controlling equity interest and ILPT retained a 61% equity interest in the joint venture. The joint venture also entered into a $1.4 billion floating rate CMBS loan secured by 82 of the acquired properties and assumed $323 million of existing MNR mortgage debt. ILPT used the proceeds from the joint venture to partially fund the MNR purchase. ILPT funded its equity interest in the joint venture and the balance of the MNR purchase price with proceeds from a $1.385 billion draw on a bridge loan facility secured by 109 MNR and ILPT properties and proceeds from a $700 million fixed rate CMBS loan secured by 17 existing ILPT properties. In connection with the closing of the MNR transaction, ILPT also terminated its existing $750 million revolving credit facility.
John Murray, President and Chief Executive Officer of ILPT, made the following statement regarding today’s announcement: “The successful completion of the MNR acquisition creates a stronger ILPT with enhanced scale, additional high quality e-commerce focused mainland properties and increased tenant and geographic diversity. This accretive transaction is complementary to our existing portfolio and increases ILPT’s exposure to key markets that offer attractive long-term investment prospects. It also further demonstrates our strong and growing relationships with private capital investors, providing ILPT with access to efficient capital to support future growth. We have already completed significant steps in our integration plan and are well positioned to continue capitalizing on the ongoing strong fundamental tailwinds in the industrial sector.”
ILPT expects to repay the $1.385 billion bridge loan facility with proceeds from the sale of approximately 30 MNR properties and from borrowings under a new credit facility it plans to enter by mid-2022. In addition, ILPT plans to sell additional equity interests in the joint venture, which would reduce its ownership percentage in the joint venture and raise additional proceeds to decrease ILPT’s leverage. As a result, ILPT expects that its consolidated net debt to Adjusted EBITDAre will be approximately 8.0x by year end 2022.
Certain Expected Strategic Transaction Benefits
- Accretive to Normalized FFO per share
- Improves existing portfolio by adding Class A, e-commerce focused assets
- Increases scale and provides better access to investment opportunities
- Adds geographic and tenant diversity
- Includes an active pipeline through acquisitions and property expansions
- Provides a platform for growth through relationships with merchant builders
On a pro forma basis as of Feb. 28, 2022, ILPT will have a portfolio consisting of 383 properties containing approximately 55 million rentable square feet located in 39 states with a portfolio occupancy of over 99% and a weighted average remaining lease term of eight years.
