Plymouth Industrial REIT Announces Strategic Partnership with Sixth Street
Plymouth Industrial REIT (NYSE: PLYM) has announced a strategic partnership with Sixth Street, securing approximately $500 million in capital for acquisitions. The deal includes a $250 million investment from Sixth Street, comprising a 65% joint venture ownership of Plymouth's Chicago portfolio and a non-convertible preferred equity investment. Plymouth will contribute its Chicago-area properties at a 6.2% capitalization rate, retaining 35% ownership of the 5.9 million-square-foot portfolio.
The transaction is leverage-neutral, with overall leverage expected to decline in Q4 2024. Plymouth affirmed its 2024 Core FFO guidance of $1.88 to $1.90 per share. The partnership aims to accelerate earnings growth and scale the platform in key industrial markets without relying solely on public equity markets.
Plymouth Industrial REIT (NYSE: PLYM) ha annunciato una partnership strategica con Sixth Street, assicurando circa 500 milioni di dollari in capitale per acquisizioni. L'accordo prevede un investimento di 250 milioni di dollari da parte di Sixth Street, che comprende una partecipazione in joint venture del 65% nel portafoglio di Plymouth a Chicago e un investimento in equity preferenziale non convertibile. Plymouth contribuirà con le sue proprietà nell'area di Chicago a un tasso di capitalizzazione del 6,2%, mantenendo il 35% della proprietà del portafoglio di 5,9 milioni di piedi quadrati.
La transazione è neutra rispetto all'indebitamento, con un decremento previsto dell'indebitamento generale nel quarto trimestre del 2024. Plymouth ha confermato la sua guida sul Core FFO per il 2024 di 1,88 - 1,90 dollari per azione. La partnership mira ad accelerare la crescita degli utili e ad espandere la piattaforma nei mercati industriali chiave senza fare affidamento esclusivamente sui mercati azionari pubblici.
Plymouth Industrial REIT (NYSE: PLYM) ha anunciado una asociación estratégica con Sixth Street, asegurando aproximadamente 500 millones de dólares en capital para adquisiciones. El acuerdo incluye una inversión de 250 millones de dólares de Sixth Street, que comprende una propiedad conjunta del 65% en el portafolio de Plymouth en Chicago y una inversión de capital preferente no convertible. Plymouth aportará sus propiedades en el área de Chicago a una tasa de capitalización del 6.2%, manteniendo el 35% de propiedad del portafolio de 5.9 millones de pies cuadrados.
La transacción es neutral en cuanto al apalancamiento, con una disminución del apalancamiento general esperada en el cuarto trimestre de 2024. Plymouth afirmó su pronóstico de Core FFO para 2024 de 1.88 a 1.90 dólares por acción. La asociación busca acelerar el crecimiento de ganancias y escalar la plataforma en mercados industriales clave sin depender exclusivamente de los mercados de capitales públicos.
Plymouth Industrial REIT (NYSE: PLYM)는 Sixth Street와 전략적 파트너십을 발표하며 약 5억 달러의 자본을 인수에 확보했습니다. 이 거래는 Sixth Street의 2억 5천만 달러 투자를 포함하며, Plymouth의 시카고 포트폴리오에 대한 65%의 조인트 벤처 소유권과 비 전환형 우선주 투자로 구성됩니다. Plymouth는 시카고 지역의 자산을 6.2%의 자본화율로 기여하고, 590만 평방피트 포트폴리오의 35% 소유권을 유지합니다.
이번 거래는 레버리지 영향을 중립적으로 유지하며, 2024년 4분기에 전체 레버리지가 감소할 것으로 예상됩니다. Plymouth는 2024년 Core FFO 가이던스를 주당 1.88~1.90 달러로 확정했습니다. 이 파트너십은 핵심 산업 시장에서 수익 성장을 가속화하고 플랫폼을 확장하는 것을 목표로 하며, 공공 자본 시장에만 의존하지 않으려 합니다.
Plymouth Industrial REIT (NYSE: PLYM) a annoncé un partenariat stratégique avec Sixth Street, sécurisant environ 500 millions de dollars en capital pour des acquisitions. L'accord comprend un investissement de 250 millions de dollars de la part de Sixth Street, comprenant une participation de 65% en coentreprise dans le portefeuille de Plymouth à Chicago et un investissement en actions préférentielles non convertibles. Plymouth contribuera avec ses propriétés de la région de Chicago à un taux de capitalisation de 6,2%, conservant 35% de la propriété du portefeuille de 5,9 millions de pieds carrés.
La transaction est neutre en termes de levier, avec une baisse globale attendue du levier au quatrième trimestre de 2024. Plymouth a confirmé ses prévisions de Core FFO pour 2024 de 1,88 à 1,90 dollars par action. Le partenariat vise à accélérer la croissance des bénéfices et à développer la plateforme dans des marchés industriels clés sans se fier uniquement aux marchés d'actions publics.
Plymouth Industrial REIT (NYSE: PLYM) hat eine strategische Partnerschaft mit Sixth Street angekündigt und sichert sich etwa 500 Millionen Dollar an Kapital für Akquisitionen. Das Angebot umfasst eine Investition von 250 Millionen Dollar von Sixth Street, die eine 65%ige Joint-Venture-Beteiligung am Chicago-Portfolio von Plymouth sowie eine nicht konvertierbare Vorzugsaktieninvestition umfasst. Plymouth wird seine Immobilien im Raum Chicago zu einem Kapitalisierungszins von 6,2% einbringen und behält 35% des Eigentums an dem 5,9 Millionen Quadratfuß umfassenden Portfolio.
Die Transaktion ist leverage-neutral, wobei ein Rückgang der Gesamtverschuldung für das vierte Quartal 2024 erwartet wird. Plymouth bestätigte seine Prognose für 2024 des Core FFO von 1,88 bis 1,90 Dollar pro Aktie. Die Partnerschaft zielt darauf ab, das Umsatzwachstum zu beschleunigen und die Plattform in wichtigen Industriefeldern zu skalieren, ohne sich ausschließlich auf die öffentlichen Kapitalmärkte zu verlassen.
- Secured $500 million in capital for acquisitions through strategic partnership
- Transaction is leverage-neutral with leverage expected to decline in Q4 2024
- Chicago portfolio valued at 6.2% cap rate, higher than current implied valuation
- Affirmed 2024 Core FFO guidance of $1.88 to $1.90 per share
- Generates $212 million in deployable proceeds after transaction costs
- Dilution potential from 11.76 million detachable warrants issued to Sixth Street
- 7% annual return payable on $140 million Preferred Equity investment
- Reduction in ownership of Chicago portfolio from 100% to 35%
Insights
This strategic partnership with Sixth Street is a significant development for Plymouth Industrial REIT. The
The structure of the deal, combining a joint venture and preferred equity, is financially savvy. It allows Plymouth to de-risk legacy assets, generate fee income and reduce secured debt while maintaining leverage targets. The
Importantly, Plymouth affirmed its 2024 Core FFO guidance, suggesting the deal's immediate impact on earnings is neutral to positive. Long-term, this partnership positions Plymouth for accelerated growth in a capital-constrained market, potentially leading to increased market share and economies of scale.
This partnership underscores the growing interest in industrial real estate, particularly in the sub-250,000-square-foot segment. Plymouth's focus on primary and secondary markets is strategic, as these areas often offer higher yields and less competition from institutional investors.
The
The deal's structure allows Plymouth to recycle capital from stabilized assets into new opportunities, potentially capturing higher yields. With Sixth Street's backing, Plymouth is well-positioned to capitalize on any market dislocations or distressed opportunities that may arise, giving it a competitive edge in an evolving market landscape.
The partnership also highlights the increasing importance of joint ventures in the real estate sector, allowing REITs to access capital and grow without solely relying on public markets or traditional debt.
This strategic partnership represents a vote of confidence from a major investment firm in Plymouth's business model and management team. It provides Plymouth with significant dry powder to pursue acquisitions in a market where many competitors may be capital-constrained.
The deal's structure is particularly clever. By contributing the Chicago portfolio to a joint venture, Plymouth crystallizes the value of these assets at an attractive cap rate, potentially narrowing the gap between its private market value and public market valuation. The preferred equity component provides flexible, long-term capital without immediate dilution to common shareholders.
The warrant structure creates a win-win scenario. It provides Sixth Street with potential upside, aligning their interests with Plymouth's growth, while the tiered exercise prices incentivize share price appreciation. For Plymouth, it's a way to potentially raise additional equity at a premium to current prices.
Investors should note that while this deal enhances Plymouth's growth prospects, it also introduces a new level of complexity to the company's capital structure and increases its reliance on a single strategic partner.
Highlights:
- The transaction provides Plymouth with approximately
$500 million of capital to pursue acquisitions - Sixth Street intends to be a strategic partner in pursuing additional joint venture opportunities with Plymouth in both new and existing industrial markets
- Sixth Street to provide a total of
$250 million of capital in the form of a65% joint venture ownership of Plymouth’s Chicago portfolio and a non-convertible preferred equity investment into the Operating Partnership - Plymouth will contribute its Chicago-area properties to the joint venture with Sixth Street at a
6.2% capitalization rate for a total gross asset value of approximately$356 million and will retain35% ownership of the approximately 5.9 million-square-foot portfolio - The transaction is leverage-neutral with overall leverage expected to decline sequentially in the fourth quarter after closing of the joint venture and remain in line with Plymouth’s stated leverage targets for 2024
- Plymouth affirmed its previously issued 2024 Core FFO full year guidance range of
$1.88 t o$1.90 per share provided on August 1, 2024
BOSTON, Aug. 27, 2024 (GLOBE NEWSWIRE) -- Plymouth Industrial REIT, Inc. (NYSE: PLYM) (the “Company”) today announced a strategic agreement with Sixth Street, a leading global investment firm, for significant, long-term growth capital to accelerate earnings growth and scale the platform in key industrial markets. The
“We are excited to enter into this partnership with Sixth Street and grow the platform for the benefit of all shareholders,” said Jeff Witherell, Co-Founder, Chairman and Chief Executive Officer of Plymouth. “By teaming up with Sixth Street, we are able to access a significant amount of capital to fuel accretive growth while keeping us within our stated leverage boundaries for 2024. With this investment, we are well positioned for the balance of 2024 and 2025 as we face an evolving market with increasingly interesting opportunities.”
“The importance of placing a substantial marker on our entire portfolio with the valuation of our Chicago portfolio at a
“Plymouth is an impressive full service real estate company with a proven track record of success investing in and operating properties in primary and secondary industrial markets,” said Marcos Alvarado, Partner and Head of U.S. Real Estate at Sixth Street. “With limited supply in the sub-250,000-square-foot building segment, the Company’s portfolio continues to benefit from low vacancy and strong rent growth. By making this strategic investment, we believe we will open the door to further opportunities for growth and partnership within the industrial real estate sector as it continues to benefit from strong underlying secular trends. We look forward to working closely with the Plymouth team to accelerate their growth plans.”
Sixth Street Investment Deal Terms
- The Sixth Street investment in the Company is facilitated through two principal components: (i)
$116 million , or65% of the required equity in a joint venture wherein the Company will contribute its Chicago portfolio of 34 wholly-owned properties comprising approximately 5.9 million square feet, and (ii)$140 million of non-convertible Series C Cumulative Perpetual Preferred Units (“Preferred Equity”) of the Company’s operating partnership (“OP”). - The Chicago portfolio will be contributed at a
6.20% cap rate based on approximately$22 million in net operating income, equivalent to approximately$356 million of gross asset value. The portfolio will be financed at closing (which is expected to occur in the next 45 days) with approximately$178 million (50% LTV) of secured mortgages. The joint venture will generate approximately$294 million of gross proceeds to the Company, which results in approximately$212 million of deployable proceeds after the mortgage assumption, transaction costs and capital expenditure escrows. - The Preferred Equity, which can be redeemed at any time following the initial closing, had an initial closing of
$61 million on August 26, 2024, and has an additional$79 million to be provided no later than nine months after the initial closing. Sixth Street is paid a return of7.0% per year (4.0% cash pay portion with a3.0% PIK), which increases after years five and seven. Plymouth will include the4.0% cash pay portion of the Preferred Equity dividend in its Core FFO and AFFO calculations. Sixth Street is entitled to the greater of its$140 million investment plus accrued but unpaid distributions or a preferred multiple of 1.35x the total closing amount of$140 million (less any previously paid cash distributions). - In addition, Sixth Street will be issued 11.76 million detachable warrants (“Warrants”) to purchase OP common units. The term of the Warrants is five years with a two-year extension option based on certain conditions. Plymouth has the option of net settlement of these Warrants at exercise either through cash or shares. The Warrants can be exercised at the following prices: 4.41 million at
$25.25 per unit; 2.94 million at$26.25 per unit; and 4.41 million at$27.25 per unit. For illustrative purposes only, if the Warrants were settled on a net share basis at$1.00 ,$2.00 or$3.00 per unit above the weighted average Warrant exercise price of$26.25 per unit, the Warrants would represent approximately0.9% ,1.8% , and2.6% , respectively, of the 45,885,235 common shares and unit outstanding as of August 26, 2024.
About Plymouth
Plymouth Industrial REIT, Inc. (NYSE: PLYM) is a full service, vertically integrated real estate investment company focused on the acquisition, ownership and management of single and multi-tenant industrial properties. Our mission is to provide tenants with cost effective space that is functional, flexible and safe.
About Sixth Street
Sixth Street is a leading global investment firm with over
Forward-Looking Statements
This press release includes “forward-looking statements” that are made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933 and of Section 21E of the Securities Exchange Act of 1934. The forward-looking statements in this release do not constitute guarantees of future performance. Investors are cautioned that statements in this press release, which are not strictly historical statements, including, without limitation, statements regarding management's plans, objectives and strategies, as well as statements regarding the timing of the consummation of the transactions, if at all, and the anticipated benefits therefrom, constitute forward-looking statements. Such forward-looking statements are subject to a number of known and unknown risks and uncertainties that could cause actual results to differ materially from those anticipated by the forward-looking statements, many of which may be beyond our control. Forward-looking statements generally can be identified by the use of forward-looking terminology such as “may,” “plan,” “seek,” “will,” “expect,” “intend,” “estimate,” “anticipate,” “believe” or “continue” or the negative thereof or variations thereon or similar terminology. Any forward-looking information presented herein is made only as of the date of this press release, and we do not undertake any obligation to update or revise any forward-looking information to reflect changes in assumptions, the occurrence of unanticipated events, or otherwise.
Contacts:
Plymouth Industrial REIT, Inc.
Tripp Sullivan
SCR Partners
IR@plymouthreit.com
Sixth Street
Patrick Clifford
media@sixthstreet.com
FAQ
What is the value of Sixth Street's investment in Plymouth Industrial REIT (PLYM)?
What is the capitalization rate for Plymouth's Chicago portfolio in the Sixth Street deal?
How will the Sixth Street partnership affect Plymouth's (PLYM) leverage?
What is Plymouth Industrial REIT's (PLYM) 2024 Core FFO guidance?
How many warrants were issued to Sixth Street as part of the deal with Plymouth (PLYM)?
