Oxford Properties Will Buy Industrial Portfolio From KKR for $2.2B
By Nicholas Rizzi August 17, 2021 10:36 am
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Oxford Properties agreed to buy a 14.5 million-square-foot industrial portfolio from KKR for $2.2 billion, as the industrial market continues to be red-hot during the pandemic, the firms announced Tuesday.
The deal, expected to close within the next few months, consists of 149 “infill” warehouses and distribution centers near larger cities, spread out across 12 markets, according to KKR. Locations include California’s Inland Empire, Dallas, San Diego, the Baltimore-Washington corridor, Tampa and Orlando.
KKR said it started assembling this portfolio in 2018 and built it up through 50 individual transactions.
“Four years ago, we set out to create a large stabilized portfolio that would benefit from secular changes in the logistics sector largely driven by e-commerce and consumer preference changes,” Roger Morales, head of real estate for KKR, said in a statement. “Given the highly fragmented asset class, the strategy included the creation of a best-in-class operating platform and a targeted investment effort focused on growing cities and key distribution nodes in the U.S.”
The deal gives the Canada-based Oxford a huge boost to its growing industrial footprint in the United States and provides it with its first infill properties in the country.
“High-quality, infill, 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.,” Ankit Bhatt, vice president of investments at Oxford, said in a statement. “Growing our U.S. industrial business is one of Oxford’s highest conviction global investment strategies as we continue to build, buy and invest in the physical infrastructure that serves the digital economy.”
The industrial market has been booming in recent years, but kicked into high gear during the coronavirus pandemic as more customers flocked to online shopping, creating an even bigger demand for warehouse space.
Industrial properties across the country saw record-low vacancy rates and high asking rents in the second quarter of 2021, while the net absorption of space hit its highest on record, at 107 million square feet, according to a report by JLL.
Oxford’s billion-dollar industrial deal comes a little more than a week after Blackstone made one of its own.
Blackstone picked up WPT Industrial Real Estate Investment Trust in an all-cash deal valued at $3.1 billion, giving the Manhattan-based investment giant 37.5 million square feet of warehouse space across 19 states.
And last month, Sam Zell’s Equity Commonwealth picked up industrial giant Monmouth Real Estate Investment Corporation in a $3.4 billion all-stock deal, beating out Barry Sternlicht’s Starwood Capital Group competing bid.
Nicholas Rizzi can be reached at nrizzi@commercialobserver.com.
