Industrial Logistics Properties to Acquire Monmouth

Industrial Logistics Properties Trust (ILPT) inked a deal to acquire all outstanding shares of Monmouth Real Estate Investment Corporation (MNR) for $21 per share in an all-cash deal worth $4 billion.

Following the news, shares of the real estate investment trust were down 5.6%, closing at $26.71 on November 5. (See Industrial Logistics Properties stock charts on TipRanks)

The deal price includes committed MNR acquisitions, transaction costs as well as $409 million of MNR’s debt.

Benefits of the Transaction

The deal is expected to be immediately accretive to normalized funds from operation (FFO) per share.

The addition of MNR’s high-quality diversified portfolio of 126 new Class A, single-tenant, net-leased, e-commerce focused industrial properties will significantly improve the quality and diversity of ILPT’s existing industrial and logistics portfolio.

Furthermore, the acquired portfolio could also lead to higher scale and growth opportunities, with over 26 million square feet in 32 states, generating annualized rental revenue of $169.4 million.

Other Details

ILPT plans to fund a part of the acquisition by entering a joint venture with institutional investors. The acquisition is expected to close in the first half of 2022, subject to certain regulatory approvals.

Management Weighs In

ILPT CEO, John Murray, commented, “This transaction adds 126 high-quality industrial assets to ILPT’s portfolio and expands ILPT’s ability to benefit from ongoing strong fundamental tailwinds in the industrial sector.”

He further added, “This accretive transaction more than doubles the properties in ILPT’s mainland portfolio and this scale is expected to expand ILPT’s growth opportunities and access to capital, which we expect will drive cash flow growth and long-term value for our shareholders.”

Wall Street’s Take

Last week, JMP Securities analyst Aaron Hecht reiterated a Buy rating on ILPT, with the price target of $30 (13.64% upside potential).

The Wall Street community is cautiously optimistic about the stock, with a Moderate Buy consensus rating based on 1 Buy and 1 Hold. At the time of writing, the average Industrial Logistics Properties price target was $29, which implies 8.75% upside potential to current levels.