KKR To Sell 14.5M SF Industrial Real Estate Portfolio For $2.2B
The portfolio includes 149 distribution facilities in 12 U.S. industrial markets, including Atlanta, Chicago, Dallas-Fort Worth, Houston, Southern California's Inland Empire, Orlando, Phoenix, Tampa, San Diego and Washington, D.C.-Baltimore.
"Consumption-driven industrial portfolios of scale trade infrequently, so this transaction is an important next step for Oxford to build a large scale industrial business in the U.S.," Oxford Vice President of Investments Ankit Bhatt said in a statement.
Bhatt added that the acquisition complements the company's big-box development arm, IDI Logistics. Toronto-based Oxford and Montreal-based Ivanhoé Cambridge acquired IDI in 2019.
Oxford, which is the real estate arm of the Ontario Municipal Employees Retirement System, has been an aggressive investor in industrial properties. In 2020, the company became a major investor in U.S.-based Lineage Logistics, a major cold storage logistics provider.
In January, Oxford inked a deal to acquire M7 Real Estate, a pan-European logistics investment and asset manager. Oxford also made an investment in the initial public offering of ESR Cayman, a logistics real estate specialist in Asia, and follow-on investments have made Oxford one of the largest institutional investors in M7.
KKR assembled the 14.5M SF portfolio over the past few years in a string of about 50 smaller deals. The investment giant hasn't quit industrial altogether, however. Even after the sale to Oxford, it will still own over 20M SF of industrial assets.
As a property type, industrial has rarely been stronger. During the second quarter of this year, over 122M SF of industrial properties were leased nationwide, according to JLL, putting the national average vacancy at 4.8%, one of the lowest quarterly averages on record.
Likewise, U.S. industrial rents were among the highest on record, coming in at an average of $6.62 per SF, with rents up 5.1% compared with a year ago. JLL said it expects industrial rents to continue to grow between 4% and 7% over the next year.