Exeter Property Group, a global industrial property behemoth started by Ward Fitzgerald in 2006, has entered into a deal to be acquired for $1.9 billion.
EQT AB, a Stockholm private equity firm, will buy Conshohocken-based Exeter in a transaction that involves $1.07 billion in cash including $300 million to refinance existing debt and $800 million in EQT shares.
Exeter has $10 billion in assets under management and, for 2020, it is expected to generate $135 million in revenue and $80 million in earnings. While the bulk of Exeter’s portfolio consists of industrial properties, the company has expanded into life science, suburban office and other real estate throughout the United States and Europe.
Under terms of the agreement:
- EQT will acquire 100% of Exeter’s management company;
- Fitzgerald and other Exeter management shareholders will receive 65% of their consideration in newly issued EQT shares and 35 percent in cash;
- Fitzgerald and other Exeter management shareholders to join EQT and enter into lock-up agreements; and
- Funds managed by TA Associates, which own roughly 40% of Exeter, will receive 25% in newly issued EQT shares and 75% cash.
Fitzgerald had been with Liberty Property Trust prior to forming Exeter 15 years ago with Tim Weber. The focus for Exeter was industrial real estate. The two figured a confluence of variables including technology, e-commerce, bar codes that allowed a faster and more efficient movement of goods and a rise in disposable income would eventually lead to an evolution in modern big box warehouses. Industrial properties constructed three decades ago were functionally obsolete, providing an opening for companies such as Exeter to swoop in, build new ones, lease them up and make their mark by accumulating a portfolio of modern warehouse-distribution centers.
The gamble paid off as e-commerce began to dominate retail, logistics continued to expand and demand for industrial real estate grew globally. Exeter continued to evolve as a company.
In 2010, Exeter went out to raise its second fund and closed in 2011 on $615 million. That money was spent building up its core investment properties. A third fund totaling $400 million was raised in 2014 and deployed to help secure long-term leases and modernize the portfolio.
By 2015, Exeter had built up its portfolio to 209 properties totaling 58 million square feet in 25 markets. In its first big transaction, Exeter sold the properties for $3.1 billion to a joint venture of Henley Holding Co., a subsidiary of the Abu Dhabi Investment Authority, and the Public Sector Pension Investment Board, a Canadian pension investment manager.
The deal didn’t stop Exeter from continuing execute on its original strategy. The company deployed a value-add fund totaling $832 million that was focused on big box warehouses and multi-tenant logistics facilities throughout the U.S. Exeter used another $600 million fund to acquire core assets as well as a fund totaling 300 million euros to buy warehouses throughout Europe.
Exeter eventually became not only one of the leading players in industrial real estate in the U.S. and Europe but one of the largest private equity firms in Philadelphia. By the end of 2017, it had $6 billion in assets under management and grew that to $10 billion in 2020.
Exeter is vertically integrated and controls every aspect of its work whether it’s constructing, leasing or managing a property. It has 37 offices.
The deal is expected to close in the second quarter of the year. Upon completion, Exeter will be rebranded as EQT Exeter and operate independently.
“The transaction is part of EQT AB’s strategic growth ambitions within real estate and creates a scaled thematic investment platform across North America and Europe,” EQT said in a statement. “It also provides Exeter management with the ability to continue their track-record as a top performing real estate investment manager.”
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