Industrial REIT Prologis Buying KTR Capital for $5.9 Billion

Prologis, Inc. (NYSE: PLD) said April 19 it has agreed to buy industrial property owner KTR Capital Partners through a joint venture for a total of $5.9 billion.

The properties will be acquired by Prologis U.S. Logistics Venture (USLV), a consolidated joint venture with Norges Bank Investment Management (NBIM), the manager of the Norwegian Government Pension Fund Global. Prologis holds a 55 percent stake in the joint venture.

“It is rare to have the opportunity to acquire a portfolio of such high asset quality, customer profile and market composition that is so consistent with our own,” said Hamid Moghadam, chairman and CEO, of Prologis. “I have known KTR's leadership for 15 years and have always considered them to be astute investors and one of our toughest competitors in the U.S.”

Green Street Advisors analyst Eric Frankel noted that the KTR portfolio is one of only a few privately owned portfolios currently on the market. The sale to Prologis and NBIM could be a sign of further deals to come, according to Frankel.

“The KTR portfolio is likely to be the first of a few large industrial transactions in the pipeline as mergers and acquisitions activity continues to heat up across the commercial real estate landscape,” he said.

Frankel added that “the heating M&A environment puts smaller industrial REITs further in play.”

Ross Smotrich , managing director at Barclays, said the acquisition of KTR “will give Prologis even greater exposure to key U.S. gateway markets, allowing the company to cater to the rapid growth of e-commerce retailing.”

The transaction is expected to enhance Prologis’ position in Southern California, New Jersey, Chicago, South Florida, Seattle and Dallas. The acquisition also includes 3.6 million square feet of development-in-progress and a land bank with a build-out potential of 6.8 million square feet. 

Law firm Mayer Brown represented Prologis on the transaction. The Mayer Brown lawyers involved were Michael Murray, Jason Wagenmaker, Michael Hermsen, David Malinger and Jeff Bruns.