Industrial Logistics Properties Trust to Acquire Monmouth Real Estate Investment



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High Quality Diversified Portfolio of 126 Class A, Single Tenant, Net Leased, E-commerce Focused Industrial Properties

Over 26 Million Square Feet in 32 States, 99.7% Leased for Weighted Average Lease Term of Approximately 8 Years

All-Cash Transaction Expected to be Immediately Accretive to Normalized FFO Per Share

Significantly Improves Quality and Diversity of ILPT’s High Quality Industrial and Logistics Portfolio

ILPT Expected to Benefit from Increased Scale and Growth Opportunities

ILPT Expects to Finance This Acquisition by Entering into a Joint Venture with Institutional Investors

ILPT to Host Conference Call Today at 8:30 a.m., Eastern Time

NEWTON, Mass.–(BUSINESS WIRE)–
Industrial Logistics Properties Trust (Nasdaq: ILPT) today announced that it has entered into a definitive agreement to acquire all of the outstanding shares 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 $409 million of debt. The transaction adds 126 new, Class A, single tenant, net leased, e-commerce focused industrial properties to ILPT’s existing high-quality portfolio and improves geographic and tenant diversity. The portfolio contains over 26 million square feet of space, has a weighted average remaining lease term of approximately 8 years, is over 80% leased to investment grade rated tenants and generates annualized rental revenue of $169.4 million. ILPT expects this transaction to be immediately accretive to Normalized Funds from Operations, or FFO, per share.

John Murray, Chief Executive Officer of ILPT, made the following statement:

“This transaction adds 126 high-quality industrial assets to ILPT’s portfolio and expands ILPT’s ability to benefit from ongoing strong fundamental tailwinds in the industrial sector. This accretive transaction more than doubles the properties in ILPT’s mainland portfolio and this scale is expected to expand ILPT’s growth opportunities and access to capital which we expect will drive cash flow growth and long-term value for our shareholders.”

Certain highlights of the acquired portfolio include:

  • 126 industrial and logistics properties with approximately 26.3 million rentable square feet.
  • Geographically diverse portfolio across 32 states with an average age of approximately 9 years.
  • 99.7% occupied with a weighted average lease term of approximately 8 years.
  • Over 80% of annual rents come from investment grade tenants.
  • Annualized rental revenue of $169.4 million as of September 30, 2021.
  • Manageable near-term lease expirations average 6.4% of contractual rents per year over the next three years.

Certain expected benefits of the transaction include:

  • Accretive Acquisition – This acquisition is expected to be immediately accretive to Normalized FFO per share. The ultimate amount of accretion will primarily depend on the size and structure of the joint venture used by ILPT to finance this acquisition. The year one cash cap rate on this acquisition is 4.0% and the GAAP cap rate is approximately 4.3%, both of which ILPT believes are higher than could be achieved if the properties were acquired one off in marketed transactions.
  • Complements ILPT’s Existing PortfolioThe acquisition improves ILPT’s mainland portfolio by adding Class A, e-commerce-focused assets, more than 80% of which are leased to investment grade tenants, with a weighted average lease term of approximately 8 years.
  • Increases Scale – ILPT gains significant scale with high quality assets. Larger REITs with high quality portfolios historically gain greater exposure to potential property investment opportunities
  • Adds Geographic Diversity– The acquisition adds geographic diversity for ILPT, particularly in Georgia and Texas where ILPT does not currently own industrial buildings.
  • Enhances Tenant Diversity – The acquisition enhances tenant diversity of ILPT’s existing tenant base, adding new tenant relationships with household names such as Home Depot, International Paper, Mercedes Benz, Toyota and Ulta.
  • Provides Platform for Additional Growth – The acquisition includes an active pipeline both through acquisitions and property expansions which provides ILPT with attractive future growth potential and enhanced tenant retention. It also allows ILPT to continue to nurture MNR’s existing strong relationships with merchant builders, providing a platform for growth in addition to ILPT’s traditional external growth through acquisition and organic growth through its leasing activities.

Deal Structure, Approvals and Timing

To finance this acquisition, ILPT expects to enter into a joint venture with one or more institutional investors for equity investments of between approximately $430 million and $1.3 billion. Accordingly, ILPT does not currently plan to issue common shares in connection with this transaction. ILPT plans to finance the balance of the $4.0 billion purchase with proceeds from new mortgage debt and the assumption of approximately $409 million of existing MNR mortgage debt. Depending on the ultimate size of the joint venture equity investments, ILPT may also use proceeds from the sale of up to approximately $1.6 billion of MNR properties to finance this transaction. Following the closing of the acquisition and execution of the financing plan described above, consolidated net debt to Adjusted EBITDAre is expected to be between 6 and 8 times at year end 2022. To ensure ILPT can finance the closing of this transaction, ILPT has secured commitments from lenders for a $4.0 billion bridge loan facility.

The transaction is subject to customary closing conditions, including MNR shareholder approval, and is expected to close in the first half of 2022.

Non-GAAP Financial Measures

ILPT refers to Normalized FFO and Adjusted EBITDAre in this press release. Normalized FFO and Adjusted EBITDAre are “non-GAAP financial measures” within the meaning of the applicable rules of the SEC. For a calculation and definition of these measures, and a reconciliation to net income, please see ILPT’s Third Quarter 2021 Supplemental Operating and Financial Data, or the Supplemental. The Supplement was attached as Exhibit 99.2 to ILPT’s Current Report on Form 8-K furnished with the SEC on October 27, 2021. In addition, please see the Supplemental for statements as to why ILPT’s management believes that these measures provide useful information to investors and additional purposes for which ILPT management uses this measure.

Advisors

Citigroup is acting as exclusive financial advisor, Hunton Andrews Kurth LLP is serving as legal advisor on the transaction and Skadden, Arps, Slate, Meagher & Flom LLP is serving as legal advisor on the bridge financing to ILPT. Joint lead arrangers and bookrunners for the bridge loan are Citigroup Global Markets Inc. and UBS Securities LLC.

Conference Call

On Friday, November 5, 2021, at 8:30 a.m., Eastern time, ILPT will host a conference call to discuss the acquisition. Following management’s remarks, there will be a question and answer period. ILPT will also provide a presentation in advance of the conference call regarding the transaction that will be available at ILPT’s website at www.ilptreit.com and as an exhibit to a Current Report on a Form 8-K furnished with the Securities and Exchange Commission, or SEC.

The conference call telephone number is 877-418-4826. Participants calling from outside the United States and Canada should dial 412-902-6758. No pass code is necessary to access the call from either number. Participants should dial in about 15 minutes prior to the scheduled start of the call. A replay of the conference call will be available for about one week after…



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