By Joshua Burd
Prologis Inc. has agreed to acquire Liberty Property Trust for $12.6 billion, in a move that deepens the industrial giant’s presence in several key markets including New Jersey.
The two companies on Sunday announced a merger agreement in which Prologis will acquire Liberty in an all-stock transaction, which includes the assumption of debt. The deal comprises an existing 107 million-square-foot portfolio, 5.1 million square feet of development in progress and 1,684 acres of land for future development with build-out potential of 19.7 million square feet — all within the booming logistics real estate sector.
Prologis, the world’s largest owner of logistics space, already has an outsized presence in New Jersey with a portfolio that includes more than 35 million square feet. Liberty’s holdings in the state include 8.15 million square feet across 46 buildings, according to its website, along with 201 acres for development.
The companies are headquartered in San Francisco and Wayne, Pennsylvania, respectively, with local offices in East Rutherford and Mount Laurel. Both Jesse Harty, Prologis’ senior vice president and market officer for New Jersey and New York, and Michael Cohen, senior vice president of investments for Liberty, are 2019 trustees of NAIOP New Jersey.
“Liberty’s logistics assets are highly complementary to our U.S. portfolio and this acquisition increases our holdings and growth potential in several key markets,” said Hamid R. Moghadam, Prologis’ chairman and CEO. “The strategic fit between the portfolios allows us to capture immediate cost and long-term revenue synergies.”
Aside from New Jersey, the merger will expand Prologis’ foothold in markets such as the Lehigh Valley, Chicago, Houston, Central Pennsylvania and Southern California, according to a news release. The boards of both Prologis and Liberty have unanimously approved the transaction, which is slated to close in the first quarter of 2020 and is subject to the approval of Liberty shareholders and other customary closing conditions.
“Liberty and Prologis represent two of the finest teams of real estate professionals and two of the finest portfolios of industrial real estate ever assembled,” said Bill Hankowsky, Liberty’s chairman and CEO. “The joining of these two platforms at this moment, when industrial logistics has become so pivotal to the new economy, will further the industry’s ability to support the nation’s supply chain and enhance value creation for our combined shareholders.
“It is a testament to Liberty’s outstanding teams of professionals, both present and past.”
The deal will be Prologis’ latest high-profile acquisition. The REIT last year acquired DCT Industrial Trust for $8.4 billion, adding 71 million square feet in the process, and recently announced plans to buy the 37.5 million-square-foot portfolio of Industrial Property Trust Inc.
Both included properties in New Jersey.
The newly announced Liberty merger also includes a 4.9 million-square-foot office operating and development portfolio, the news release said. Prologis said it plans to dispose of roughly $3.5 billion of assets on a pro rata share basis, including $2.8 billion of nonstrategic logistics properties and $700 million of office properties.
BofA Securities and Morgan Stanley are acting as financial advisers, while Wachtell, Lipton, Rosen & Katz is serving as legal adviser to Prologis. Goldman Sachs and Citigroup are acting as financial advisers, while Morgan, Lewis and Bockius LLP is serving as legal adviser to Liberty.
As of Sept. 30, Prologis owned or had investments in, on a wholly owned basis or through co-investment ventures, properties and development projects expected to total some 797 million square feet in 19 countries.