Liberty Property Trust To Buy Cabot Industrial Value Fund III In $1.48 Bln Deal

(RTTNews) - Real estate investment holding trust Liberty Property Trust (LRY) agreed Wednesday to acquire the operating partnership of Cabot Industrial Value Fund III for a total consideration of $1.475 billion, including about $230 million of assumed outstanding mortgage debt. The deal is expected to close in October.

The total consideration is expected to be about $1.5 billion after the inclusion of acquisition related net transaction expenses and anticipated capital expenditures.

"This acquisition is a compelling opportunity to increase both the size of Liberty's industrial platform and its scope," Liberty Chairman and CEO William Hankowsky said in a statement.

Following the closure of the deal, Liberty's industrial platform will increase by about 23 million square feet and will add 177 properties in 24 new and existing Liberty industrial markets. As of May 31, 2013, Cabot's portfolio was 93.3 percent leased to 436 tenants.

The acquisition will help Liberty to expand into three of the top five national industrial markets of Atlanta, Dallas, and Southern California. However, about 58 percent or 13 million square feet, of Cabot's portfolio is located in Liberty's current markets of Chicago, South Florida, Houston, New Jersey, Maryland and Central Pennsylvania.

The deal will significantly deepen Liberty's current industrial presence while extending its footprint to a national level as about 10 million square feet of the portfolio are located in 10 markets in which Liberty does not currently have a presence.

To fund the deal, Liberty has received a commitment for a $1.27 billion senior unsecured bridge loan. It intends to permanently finance the transaction with a combination of debt and equity financing.

Liberty is also planning to dispose of certain operating properties, and expecting to generate about $150 million of additional proceeds.

Separately, Malvern, Pennsylvania-based Liberty announced plans to sell 21 million newly issued common shares in an underwritten public offering in order to use part of the proceeds to fund the acquisition or other wise for working capital and general corporate purposes.

The company expects to grant the underwriters a 30-day option to purchase up to an additional 3.15 million common shares. The closing of the offering is not conditioned upon the consummation of the acquisition.

Citigroup, Inc. (C) and Goldman, Sachs & Co. (GS) are acting as joint book-running managers for the offering and have also served as Liberty's exclusive financial advisors on the acquisition.

LRY closed Wednesday's regular trading at $38.21, down $0.64 or 1.65% on a volume of 1.27 million shares.