Gramercy Property Trust is to acquire a portfolio of four industrial properties totalling approximately 1.6 million square feet for an aggregate purchase price of approximately USD73.4 million plus transaction expenses.
For the combined portfolio, year one net operating income is anticipated to be approximately USD6.6 million (9.0 per cent initial cap rate; 8.8 per cent annualized straight-line cap rate) with a weighted average lease term of approximately 6.7 years.
Gramercy will fund the equity portion of the purchase price with the issuance of OP Units.
The portfolio is 100 per cent leased and includes (i) a 550,000 square foot Class-A industrial warehouse located in Buford, Georgia (Atlanta MSA), which is 100 per cent leased through April 2020 to a global supplier of office products; (ii) a 577,000 square foot Class A industrial warehouse located in Ames, Iowa, off Interstate Highway 35 that is leased to three tenants, including 300,000 square feet to a global packaging supplier; (iii) a 328,000 square foot beverage production and distribution facility located in Wilson, North Carolina, at the intersection of Interstate-95 and US Highway 264 that is leased through May 2026 to a beverage producer; and (iv) a 102,000 square foot warehouse located in El Paso, Texas, that is leased through June 2018 to a logistics provider.
At closing, the company will assume four in-place mortgage loans aggregating approximately USD45.5 million and having an average remaining term of 3.6 years until maturity and will fund the remaining USD27.9 million of the purchase price, net of certain closing costs to be paid in cash, by issuing to the selling investors limited partnership units (OP Units) of GPT Property Trust LP, the operating partnership of Gramercy Property Trust. OP Units can be converted on a 1:1 basis into common shares of GPT at the election of the unit holder.
Gordon F DuGan, the company’s chief executive officer, says: “I am very pleased to announce our agreement to purchase this portfolio, which is subject to due diligence and certain approvals. This acquisition is a terrific example of finding accretive opportunities which provide Gramercy with additional growth without issuing equity into the market."