Global investment giant AXA’s full court press on the US logistics market took a $2.05 billion leap forward today.
AXA IM Alts, the real estate investment manager with a $190 million logistics portfolio, announced a two-stage strategy to acquire a nearly nine million s/f industrial portfolio in partnership with Nevada-based Dermody Properties.
AXA IM Alts has acquired a portfolio of 23 assets from Dermody Properties Industrial Fund II for $1.2 billion. A further nine additional assets are to be purchased for about $850 million when construction is completed in 2022 and 2023.
Dermody Properties will continue to operate the assets on behalf of the joint venture.
On completion of both acquisitions, the portfolio will total approximately 8.47 million square feet, comprising 32 assets, 65 percent of which were constructed within the past three years.
All assets occupy strategic locations in primary logistics hubs across 11 primary U.S. industrial markets, including Inland Empire, Northern California, Seattle, Portland, Las Vegas, Chicago, Louisville, Atlanta, Eastern Pennsylvania, Northern New Jersey and Wilmington.
With an average age of eight years and average building size of 208,000 s/f the total portfolio offers modern facilities to suit a variety of potential occupiers. The majority of assets sit within the 150,000 – 400,000 s/f size range which is currently experiencing the strongest leasing activity in the U.S. The initial 23-asset portfolio is 77 percent leased, with strong leasing prospects for the vacant space. The entire portfolio includes a majority of investment-grade tenants.
The newly acquired and to-be- acquired assets complement AXA IM Alts’ existing exposure to the U.S. industrial sector which, upon completion of both transactions with Dermody Properties, will comprise c. $3.4 billion of assets under management across approximately 20 key US markets.
The initial acquisition expands AXA IM Alts’ global logistics platform to 65 million sq ft in 12 countries with a total value of $8 billion, as the sector remains sought-after on account of favorable supply / demand metrics driven by shifts in worldwide consumption habits.
Steve McCarthy, Head of North America at AXA IM Alts, commented: “The quality and scale of the Dermody Properties portfolio, together with its resilient income profile and attractive geographical diversification, made it stand out as a particularly compelling investment opportunity. Logistics remains one of AXA IM Alts’ long-term conviction calls as demand for prime space shows no sign of abating thanks to structural shifts driven by the rapid growth of e-commerce and evolving changes to worldwide supply chains. We are delighted to partner with Dermody Properties to maximize the value of the portfolio for the benefit of our clients in the years to come.”
Douglas A. Kiersey, Jr., President of Dermody Properties, added: “We are very pleased to welcome AXA IM Alts as our partner as they expand their US portfolio. Dermody Properties’ strategic investments in infill industrial land in select US markets has allowed us to develop assets which enhance the distribution networks of our customers and in turn, optimize delivery times to the end consumer. On behalf of U.S. Core Logistics Partners II, LP, we look forward to continuing to serve the needs of our customers.”
AXA completed one of last year’s biggest industrial acquisitions when it paid $875 million for a portfolio of 27 assets in Chicago, Houston, Los Angeles, Central New Jersey, Dallas, South Florida, Southern New Jersey and Atlanta in joint venture with Cabot Properties.
