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Oxford Properties acquires industrial property worth $2.2 billion from KKR

By Yashasvini on Aug 17, 2021 | 04:37 AM IST

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Oxford Properties will acquire a portfolio of industrial properties from investment firm KKR, for $2.2 billion.

The industrial property portfolio comprises an area of 14.5 million square feet. It consists of 149 high-quality distribution buildings located across 12 major industrial U.S. markets, including the Inland Empire, Dallas, Atlanta, Phoenix, Chicago, Houston, Tampa, Orlando, San Diego, and the Baltimore Washington corridor.

Oxford stated that the transaction would ideally close in the coming months.

The 149 buildings are close to population centers mostly in high-growth Sunbelt states. Oxford’s latest acquisition is a part of its four-year-old effort to muscle into the U.S. market.

Oxford is a subsidiary of the Ontario Municipal Employees Retirement System. It has made major investments in cold-storage facilities and U.S. regional distribution centers as large as one million square feet.

E-commerce has increased the demand for logistics and warehousing facilities. During the pandemic, more people moved to online shopping, leading to a significant spike in the demand for storage facilities. This has made warehouses a hot bet for commercial real estate. Prices of industrial property have been steadily rising.

In the company’s press release, Ankit Bhatt, vice president of investments at Oxford said, “This transaction is an important next step for Oxford to build a large scale industrial business in the U.S. 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.”

In 2017, buyers typically got a yield from purchases in the low 5% range, according to brokers and analysts. Yields have fallen to about 4%, a sign of rising prices, analysts say, reported Wall Street Journal (WSJ).

KKR assembled the 14.5 million square-feet portfolios in more than 50 transactions over the past three years. It still owns over 20 million square feet of industrial property.

Oxford has US$55.7 billion under management and has been purchasing industrial property in Canada for the past decade. It also owns industrial property in Asia and Europe.

(With inputs from WSJ)

Picture Credits: Investable Universe

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