REAL ESTATE NEWS

Real estate firms Sachem Capital Corp. and Industrial Realty Group have struck a deal to form an industrial REIT that's anticipated to hold an implied enterprise value of roughly $3.4 billion.

The deal would allow it to operate as a combined company known as IRG Realty Trust, Inc. (IRGT). The biggest portion of the deal involves Industrial Realty contributing 98 of its 200 individually owned asset industrial portfolio to the REIT, representing $2.9 billion in gross value to the new firm.

Additionally, Sachem is pitching in about $470 million in total assets to the REIT. The assets not being contributed will be operated and owned by Industrial Realty's private segment.

To sum that up, Industrial Realty is contributing its industrial properties, while Sachem, which focuses on lending in the real estate space, is calling this move a "strategic reset" for its shareholders. Industrial Realty will own 94.1 percent of the new firm, with Sachem taking a 5.9 percent stake.

The deal values Sachem shares at $2 per share, a 90 percent premium versus its 30-day volume-weighted average price.

Overall, IRGT plans to focus on industrial infrastructure that's "mission-critical," while supporting distribution and manufacturing tenants. Overall, the REIT expects to sustain "durable cash flows" and "accelerated" rent growth across properties, according to a statement by the two firms.

"We are excited that this transaction will bring a high quality industrial real estate portfolio to the public market with scale, diversification, and a clear operating strategy," Stuart Lichter, founder and chairman of Industrial Realty, said.

"With a dynamic portfolio grown over five decades, IRG has deep experience owning and operating industrial properties, and we expect that upon the close of the transaction, it will be one of the largest publicly listed industrial REITs in the country. Backed by IRG's experience in strategic real estate execution and acquisitions and IRGRA's active portfolio management, IRGT will be positioned to deliver a sustainable pathway to strong cash flow generation."

The transaction, subject to approval from Sachem's shareholders and other customary conditions, is expected to close by the end of the year.

Source: GlobeSt/ALM