UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
|
|
☒ |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended September 30, 2020
or
|
|
☐ |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission file number: 000-56032
Black Creek Industrial REIT IV Inc.
(Exact name of registrant as specified in its charter)
Registrant’s telephone number, including area code: (303) 228-2200
Securities registered pursuant to Section 12(b) of the Act: None
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer |
☐ |
Accelerated filer |
☐ |
Smaller reporting company |
☒ |
|
|
|
|
|
|
Non-accelerated filer |
☒ |
|
|
Emerging growth company |
☒ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☒
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
As of November 4, 2020, there were 127,092,473 shares of the registrant’s Class T common stock, 7,338,782 shares of the registrant’s Class W common stock and 2,879,694 shares of the registrant’s Class I common stock outstanding.
BLACK CREEK INDUSTRIAL REIT IV INC.
BLACK CREEK INDUSTRIAL REIT IV INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
|
|
|
|
|
|
|
|
|
As of |
||||
|
|
September 30, |
|
December 31, |
||
(in thousands, except per share data) |
|
2020 |
|
2019 |
||
|
|
(unaudited) |
|
|
|
|
ASSETS |
|
|
|
|
|
|
Net investment in real estate properties |
|
$ |
1,184,924 |
|
$ |
878,721 |
Investment in unconsolidated joint venture partnerships |
|
|
301,282 |
|
|
— |
Cash and cash equivalents |
|
|
180,683 |
|
|
51,178 |
Straight-line and tenant receivables |
|
|
9,130 |
|
|
4,590 |
Due from affiliates |
|
|
70 |
|
|
153 |
Acquisition deposits |
|
|
1,600 |
|
|
500 |
Other assets |
|
|
5,668 |
|
|
3,631 |
Total assets |
|
$ |
1,683,357 |
|
$ |
938,773 |
LIABILITIES AND EQUITY |
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
Accounts payable and accrued liabilities |
|
$ |
13,867 |
|
$ |
5,258 |
Debt, net |
|
|
461,374 |
|
|
460,211 |
Due to affiliates |
|
|
26,517 |
|
|
30,538 |
Distributions payable |
|
|
5,862 |
|
|
2,241 |
Distribution fees payable to affiliates |
|
|
42,624 |
|
|
16,467 |
Other liabilities |
|
|
29,110 |
|
|
16,855 |
Total liabilities |
|
|
579,354 |
|
|
531,570 |
Commitments and contingencies (Note 13) |
|
|
|
|
|
|
Redeemable noncontrolling interest |
|
|
3,634 |
|
|
724 |
Equity |
|
|
|
|
|
|
Stockholders’ equity: |
|
|
|
|
|
|
Preferred stock, $0.01 par value - 200,000 shares authorized, none issued and outstanding |
|
|
— |
|
|
— |
Class T common stock, $0.01 par value per share - 1,200,000 shares authorized, 119,632 and 45,240 shares issued and outstanding, respectively |
|
|
1,196 |
|
|
452 |
Class W common stock, $0.01 par value per share - 75,000 shares authorized, 6,326 and 2,736 shares issued and outstanding, respectively |
|
|
63 |
|
|
27 |
Class I common stock, $0.01 par value per share - 225,000 shares authorized, 2,672 and 1,299 shares issued and outstanding, respectively |
|
|
27 |
|
|
13 |
Additional paid-in capital |
|
|
1,207,354 |
|
|
451,526 |
Accumulated deficit |
|
|
(97,517) |
|
|
(47,730) |
Accumulated other comprehensive (loss) income |
|
|
(10,880) |
|
|
2,190 |
Total stockholders’ equity |
|
|
1,100,243 |
|
|
406,478 |
Noncontrolling interests |
|
|
126 |
|
|
1 |
Total equity |
|
|
1,100,369 |
|
|
406,479 |
Total liabilities and equity |
|
$ |
1,683,357 |
|
$ |
938,773 |
See accompanying Notes to Condensed Consolidated Financial Statements.
3
BLACK CREEK INDUSTRIAL REIT IV INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended September 30, |
|
For the Nine Months Ended September 30, |
|
||||||||
(in thousands, except per share data) |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|
||||
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Rental revenues |
|
$ |
21,313 |
|
$ |
12,548 |
|
$ |
56,435 |
|
$ |
25,512 |
|
Total revenues |
|
|
21,313 |
|
|
12,548 |
|
|
56,435 |
|
|
25,512 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Rental expenses |
|
|
5,059 |
|
|
3,142 |
|
|
13,430 |
|
|
6,113 |
|
Real estate-related depreciation and amortization |
|
|
13,231 |
|
|
6,966 |
|
|
33,679 |
|
|
13,981 |
|
General and administrative expenses |
|
|
1,035 |
|
|
574 |
|
|
2,987 |
|
|
1,817 |
|
Advisory fees, related party |
|
|
5,496 |
|
|
2,151 |
|
|
12,652 |
|
|
4,886 |
|
Acquisition costs and reimbursements |
|
|
750 |
|
|
793 |
|
|
2,362 |
|
|
2,367 |
|
Other expense reimbursements, related party |
|
|
730 |
|
|
482 |
|
|
2,223 |
|
|
1,445 |
|
Total operating expenses |
|
|
26,301 |
|
|
14,108 |
|
|
67,333 |
|
|
30,609 |
|
Other (income) expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity in loss from unconsolidated joint venture partnerships |
|
|
629 |
|
|
— |
|
|
629 |
|
|
— |
|
Interest expense and other |
|
|
3,013 |
|
|
2,776 |
|
|
8,710 |
|
|
5,131 |
|
Total expenses before expense support |
|
|
29,943 |
|
|
16,884 |
|
|
76,672 |
|
|
35,740 |
|
Total (reimbursement to) expense support from the Advisor, net |
|
|
(4,438) |
|
|
658 |
|
|
5,884 |
|
|
(502) |
|
Net expenses after reimbursement and expense support |
|
|
(34,381) |
|
|
(16,226) |
|
|
(70,788) |
|
|
(36,242) |
|
Net loss |
|
|
(13,068) |
|
|
(3,678) |
|
|
(14,353) |
|
|
(10,730) |
|
Net loss attributable to redeemable noncontrolling interest |
|
|
38 |
|
|
6 |
|
|
42 |
|
|
24 |
|
Net income attributable to noncontrolling interests |
|
|
(1) |
|
|
— |
|
|
(1) |
|
|
— |
|
Net loss attributable to common stockholders |
|
$ |
(13,031) |
|
$ |
(3,672) |
|
$ |
(14,312) |
|
$ |
(10,706) |
|
Weighted-average shares outstanding |
|
|
124,798 |
|
|
41,808 |
|
|
105,022 |
|
|
34,144 |
|
Net loss per common share - basic and diluted |
|
$ |
(0.10) |
|
$ |
(0.09) |
|
$ |
(0.14) |
|
$ |
(0.31) |
|
See accompanying Notes to Condensed Consolidated Financial Statements.
4
BLACK CREEK INDUSTRIAL REIT IV INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended |
|
For the Nine Months Ended |
|
||||||||
|
|
September 30, |
|
September 30, |
|
||||||||
(in thousands) |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|
||||
Net loss |
|
$ |
(13,068) |
|
$ |
(3,678) |
|
$ |
(14,353) |
|
$ |
(10,730) |
|
Change from cash flow hedging derivatives |
|
|
806 |
|
|
820 |
|
|
(13,132) |
|
|
820 |
|
Comprehensive loss |
|
$ |
(12,262) |
|
$ |
(2,858) |
|
$ |
(27,485) |
|
$ |
(9,910) |
|
Comprehensive loss attributable to redeemable noncontrolling interests |
|
|
36 |
|
|
5 |
|
|
104 |
|
|
23 |
|
Comprehensive loss attributable to common stockholders |
|
$ |
(12,226) |
|
$ |
(2,853) |
|
$ |
(27,381) |
|
$ |
(9,887) |
|
See accompanying Notes to Condensed Consolidated Financial Statements.
5
BLACK CREEK INDUSTRIAL REIT IV INC.
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders’ Equity |
|
|
|
|
|
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other |
|
|
|
|
|
|
|
|
|
Common Stock |
|
Additional |
|
Accumulated |
|
Comprehensive |
|
Noncontrolling |
|
|
|
|||||||
(in thousands) |
|
Shares |
|
Amount |
|
Paid-In Capital |
|
Deficit |
|
Income (Loss) |
|
Interests |
|
Total Equity |
||||||
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of June 30, 2019 |
|
36,993 |
|
$ |
370 |
|
$ |
337,563 |
|
$ |
(22,389) |
|
$ |
— |
|
$ |
1 |
|
$ |
315,545 |
Net loss (excludes $6 to redeemable noncontrolling interest) |
|
— |
|
|
— |
|
|
— |
|
|
(3,672) |
|
|
— |
|
|
— |
|
|
(3,672) |
Change from cash flow hedging activities |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
820 |
|
|
— |
|
|
820 |
Issuance of common stock |
|
7,553 |
|
|
75 |
|
|
78,845 |
|
|
— |
|
|
— |
|
|
— |
|
|
78,920 |
Share-based compensation |
|
— |
|
|
— |
|
|
54 |
|
|
— |
|
|
— |
|
|
— |
|
|
54 |
Upfront offering costs, including selling commissions, dealer manager fees, and offering costs |
|
— |
|
|
— |
|
|
(4,437) |
|
|
— |
|
|
— |
|
|
— |
|
|
(4,437) |
Trailing distribution fees |
|
— |
|
|
— |
|
|
(3,253) |
|
|
992 |
|
|
— |
|
|
— |
|
|
(2,261) |
Redemptions of common stock |
|
(42) |
|
|
— |
|
|
(396) |
|
|
— |
|
|
— |
|
|
— |
|
|
(396) |
Distributions to stockholders |
|
— |
|
|
— |
|
|
— |
|
|
(5,699) |
|
|
— |
|
|
— |
|
|
(5,699) |
Redemption value allocation adjustment to redeemable noncontrolling interest |
|
— |
|
|
— |
|
|
(15) |
|
|
— |
|
|
— |
|
|
— |
|
|
(15) |
Balance as of September 30, 2019 |
|
44,504 |
|
$ |
445 |
|
$ |
408,361 |
|
$ |
(30,768) |
|
$ |
820 |
|
$ |
1 |
|
$ |
378,859 |
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of June 30, 2020 |
|
118,432 |
|
$ |
1,185 |
|
$ |
1,110,874 |
|
$ |
(70,433) |
|
$ |
(11,684) |
|
$ |
1 |
|
$ |
1,029,943 |
Net loss (excludes $38 attributable to redeemable noncontrolling interest) |
|
— |
|
|
— |
|
|
— |
|
|
(13,032) |
|
|
— |
|
|
1 |
|
|
(13,031) |
Change from cash flow hedging activities (excludes $2 attributable to redeemable noncontrolling interest) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
804 |
|
|
— |
|
|
804 |
Issuance of common stock |
|
10,379 |
|
|
103 |
|
|
108,059 |
|
|
— |
|
|
— |
|
|
— |
|
|
108,162 |
Share-based compensation |
|
— |
|
|
— |
|
|
284 |
|
|
— |
|
|
— |
|
|
— |
|
|
284 |
Upfront offering costs, including selling commissions, dealer manager fees, and offering costs |
|
— |
|
|
— |
|
|
(5,826) |
|
|
— |
|
|
— |
|
|
— |
|
|
(5,826) |
Trailing distribution fees |
|
— |
|
|
— |
|
|
(4,178) |
|
|
2,952 |
|
|
— |
|
|
— |
|
|
(1,226) |
Redemptions of common stock |
|
(181) |
|
|
(2) |
|
|
(1,773) |
|
|
— |
|
|
— |
|
|
— |
|
|
(1,775) |
Preferred interest in Subsidiary REITs |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
125 |
|
|
125 |
Distributions to stockholders |
|
— |
|
|
— |
|
|
— |
|
|
(17,004) |
|
|
— |
|
|
(1) |
|
|
(17,005) |
Redemption value allocation adjustment to redeemable noncontrolling interest |
|
— |
|
|
— |
|
|
(86) |
|
|
— |
|
|
— |
|
|
— |
|
|
(86) |
Balance as of September 30, 2020 |
|
128,630 |
|
$ |
1,286 |
|
$ |
1,207,354 |
|
$ |
(97,517) |
|
$ |
(10,880) |
|
$ |
126 |
|
$ |
1,100,369 |
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of December 31, 2018 |
|
20,265 |
|
$ |
203 |
|
$ |
180,125 |
|
$ |
(8,556) |
|
$ |
— |
|
$ |
1 |
|
$ |
171,773 |
Net loss (excludes $24 to redeemable noncontrolling interest) |
|
— |
|
|
— |
|
|
— |
|
|
(10,706) |
|
|
— |
|
|
— |
|
|
(10,706) |
Change from cash flow hedging activities |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
820 |
|
|
— |
|
|
820 |
Issuance of common stock |
|
24,382 |
|
|
243 |
|
|
254,081 |
|
|
— |
|
|
— |
|
|
— |
|
|
254,324 |
Share-based compensation |
|
— |
|
|
— |
|
|
413 |
|
|
— |
|
|
— |
|
|
— |
|
|
413 |
Upfront offering costs, including selling commissions, dealer manager fees, and offering costs |
|
— |
|
|
— |
|
|
(14,271) |
|
|
— |
|
|
— |
|
|
— |
|
|
(14,271) |
Trailing distribution fees |
|
— |
|
|
— |
|
|
(10,531) |
|
|
2,430 |
|
|
— |
|
|
— |
|
|
(8,101) |
Redemptions of common stock |
|
(143) |
|
|
(1) |
|
|
(1,404) |
|
|
— |
|
|
— |
|
|
— |
|
|
(1,405) |
Distributions to stockholders |
|
— |
|
|
— |
|
|
— |
|
|
(13,936) |
|
|
— |
|
|
— |
|
|
(13,936) |
Redemption value allocation adjustment to redeemable noncontrolling interest |
|
— |
|
|
— |
|
|
(52) |
|
|
— |
|
|
— |
|
|
— |
|
|
(52) |
Balance as of September 30, 2019 |
|
44,504 |
|
$ |
445 |
|
$ |
408,361 |
|
$ |
(30,768) |
|
$ |
820 |
|
$ |
1 |
|
$ |
378,859 |
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of December 31, 2019 |
|
49,275 |
|
$ |
492 |
|
$ |
451,526 |
|
$ |
(47,730) |
|
$ |
2,190 |
|
$ |
1 |
|
$ |
406,479 |
Net loss (excludes $42 attributable to redeemable noncontrolling interest) |
|
— |
|
|
— |
|
|
— |
|
|
(14,313) |
|
|
— |
|
|
1 |
|
|
(14,312) |
Change from cash flow hedging activities (excludes $62 attributable to redeemable noncontrolling interest) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
(13,070) |
|
|
— |
|
|
(13,070) |
Issuance of common stock |
|
79,682 |
|
|
797 |
|
|
831,861 |
|
|
— |
|
|
— |
|
|
— |
|
|
832,658 |
Share-based compensation |
|
— |
|
|
— |
|
|
1,260 |
|
|
— |
|
|
— |
|
|
— |
|
|
1,260 |
Upfront offering costs, including selling commissions, dealer manager fees, and offering costs |
|
— |
|
|
— |
|
|
(40,273) |
|
|
— |
|
|
— |
|
|
— |
|
|
(40,273) |
Trailing distribution fees |
|
— |
|
|
— |
|
|
(33,559) |
|
|
7,404 |
|
|
— |
|
|
— |
|
|
(26,155) |
Redemptions of common stock |
|
(327) |
|
|
(3) |
|
|
(3,212) |
|
|
— |
|
|
— |
|
|
— |
|
|
(3,215) |
Preferred interest in Subsidiary REITs |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
125 |
|
|
125 |
Distributions to stockholders |
|
— |
|
|
— |
|
|
— |
|
|
(42,878) |
|
|
— |
|
|
(1) |
|
|
(42,879) |
Redemption value allocation adjustment to redeemable noncontrolling interest |
|
— |
|
|
— |
|
|
(249) |
|
|
— |
|
|
— |
|
|
— |
|
|
(249) |
Balance as of September 30, 2020 |
|
128,630 |
|
$ |
1,286 |
|
$ |
1,207,354 |
|
$ |
(97,517) |
|
$ |
(10,880) |
|
$ |
126 |
|
$ |
1,100,369 |
See accompanying Notes to Condensed Consolidated Financial Statements.
6
BLACK CREEK INDUSTRIAL REIT IV INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
|
|
|
|
|
|
|
|
|
For the Nine Months Ended September 30, |
||||
(in thousands) |
|
2020 |
|
2019 |
||
Operating activities: |
|
|
|
|
|
|
Net loss |
|
$ |
(14,353) |
|
$ |
(10,730) |
Adjustments to reconcile net loss to net cash provided by operating activities: |
|
|
|
|
|
|
Real estate-related depreciation and amortization |
|
|
33,679 |
|
|
13,981 |
Equity in loss from unconsolidated joint venture partnerships |
|
|
629 |
|
|
— |
Straight-line rent and amortization of above- and below-market leases |
|
|
(6,362) |
|
|
(2,898) |
Other |
|
|
1,999 |
|
|
1,091 |
Changes in operating assets and liabilities: |
|
|
|
|
|
|
Tenant receivables and other assets |
|
|
372 |
|
|
(1,335) |
Accounts payable and accrued liabilities |
|
|
1,166 |
|
|
3,891 |
Due from / to affiliates, net |
|
|
1,884 |
|
|
4,600 |
Net cash provided by operating activities |
|
|
19,014 |
|
|
8,600 |
Investing activities: |
|
|
|
|
|
|
Real estate acquisitions |
|
|
(326,916) |
|
|
(428,937) |
Acquisition deposits |
|
|
(1,600) |
|
|
(500) |
Capital expenditures |
|
|
(4,883) |
|
|
(1,269) |
Investment in unconsolidated joint venture partnerships |
|
|
(301,839) |
|
|
— |
Net cash used in investing activities |
|
|
(635,238) |
|
|
(430,706) |
Financing activities: |
|
|
|
|
|
|
Proceeds from line of credit |
|
|
— |
|
|
301,000 |
Repayments of line of credit |
|
|
(107,000) |
|
|
(277,000) |
Proceeds from term loan |
|
|
107,500 |
|
|
200,000 |
Debt issuance costs paid |
|
|
(2,780) |
|
|
(1,672) |
Proceeds from issuance of common stock |
|
|
778,685 |
|
|
238,059 |
Offering costs paid in connection with issuance of common stock |
|
|
(7,619) |
|
|
— |
Distributions paid to common stockholders and to redeemable noncontrolling interest holders |
|
|
(13,040) |
|
|
(4,258) |
Distribution fees paid to affiliates |
|
|
(6,802) |
|
|
(2,255) |
Redemptions of common stock |
|
|
(3,215) |
|
|
(1,405) |
Net cash provided by financing activities |
|
|
745,729 |
|
|
452,469 |
Net increase in cash, cash equivalents and restricted cash |
|
|
129,505 |
|
|
30,363 |
Cash, cash equivalents and restricted cash, at beginning of period |
|
|
51,178 |
|
|
19,021 |
Cash, cash equivalents and restricted cash, at end of period |
|
$ |
180,683 |
|
$ |
49,384 |
See accompanying Notes to Condensed Consolidated Financial Statements.
7
BLACK CREEK INDUSTRIAL REIT IV INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. BASIS OF PRESENTATION
Unless the context otherwise requires, the “Company” and “BCI IV” refers to Black Creek Industrial REIT IV Inc. and its consolidated subsidiaries.
The accompanying unaudited condensed consolidated financial statements included herein have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Accordingly, certain disclosures normally included in the annual audited financial statements prepared in accordance with accounting principles generally accepted in the U.S. (“GAAP”) have been omitted. As such, the accompanying unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, filed with the SEC on March 5, 2020 (“2019 Form 10-K”).
In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments and eliminations, consisting only of normal recurring adjustments necessary for a fair presentation in conformity with GAAP.
Recently Issued Accounting Standards
In August 2020, the FASB issued ASU 2020-06, “Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40)” (“ASU 2020-06”), which updates various codification topics to simplify the accounting guidance for certain financial instruments with characteristics of liabilities and equity, with a specific focus on convertible instruments and the derivative scope exception for contracts in an entity’s own equity. ASU 2020-06 is effective for annual and interim reporting periods beginning after December 15, 2021, with early adoption permitted for annual and interim reporting periods beginning after December 15, 2020. The Company plans to adopt ASU 2020-06 when it becomes effective for the Company, as of the reporting period beginning January 1, 2021. The Company’s initial analysis indicates that the adoption of this standard will not have a material effect on its condensed consolidated financial statements.
Recently Adopted Accounting Standards
In March 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2020-03, “Codification Improvements to Financial Instruments” (“ASU 2020-03”), which updates various codification topics related to financial instruments by clarifying or improving the disclosure requirements to align with the SEC’s regulations. The Company adopted this standard immediately upon its issuance. The adoption did not have a material effect on the Company’s condensed consolidated financial statements.
In March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform (Topic 848)” (“ASU 2020-04”), which provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments only apply to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. ASU 2020-04 is effective for annual and interim reporting periods beginning after March 12, 2020, with early adoption permitted, through December 31, 2022. The expedients and exceptions do not apply to contract modifications made and hedging relationships entered into after December 31, 2022. The Company adopted this standard immediately upon its issuance. The adoption did not have a material effect on the Company’s condensed consolidated financial statements.
In April 2020, the FASB issued a Staff Question-and-Answer to clarify whether lease concessions related to the effects of COVID-19 require the application of lease modification guidance under the new lease standard, which the Company adopted on January 1, 2019. The guidance did not have a material effect on the Company's condensed consolidated financial statements. However, its future impact to the Company is dependent upon the extent of lease concessions granted to customers as a result of the COVID-19 pandemic in future periods and the elections made by the Company at the time of entering such concessions. It is not possible at this time to accurately project the nature or extent of any such possible future concessions.
In October 2020, the FASB issued ASU 2020-10, “Codification Improvements” (“ASU 2020-10”), which updates various codification topics by clarifying or improving disclosure requirements to align with the SEC’s regulations. The Company adopted this standard immediately upon its issuance. The adoption did not have a material effect on the Company’s condensed consolidated financial statements.
8
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Investment in Unconsolidated Joint Venture Partnerships
The Company analyzes its investment in an unconsolidated joint venture under GAAP to determine if the joint venture is a variable interest entity (“VIE”) and whether the requisite substantial participating rights described in the GAAP are held by the partners not affiliated with the Company. If the joint venture is not a VIE and the partners not affiliated with the Company hold substantial participating rights, the Company accounts for its investment in the joint venture under the equity method. Under the equity method, the investment is initially recorded at cost (including direct acquisition costs) and subsequently adjusted to reflect the Company’s proportionate share of equity in the joint venture’s net income (loss), distributions received, contributions made and certain other adjustments made, as appropriate, which is included in investment in unconsolidated joint venture partnerships on its condensed consolidated balance sheets. The proportionate share of ongoing income or loss of the unconsolidated joint venture partnerships is recognized in equity in loss of unconsolidated joint venture partnerships on the condensed consolidated statements of operations. The outside basis portion of the Company’s unconsolidated joint venture partnerships is amortized over the anticipated useful lives of the joint ventures’ tangible and intangible assets acquired and liabilities assumed.
When circumstances indicate there may have been a reduction in the value of an equity investment, the Company evaluates whether the loss is other than temporary. If the Company concludes it is other than temporary, an impairment charge is recognized to reflect the equity investment at fair value. No impairment losses were recorded related to the Company’s investment in unconsolidated joint venture partnerships for the nine months ended September 30, 2020. See “Note 5” for additional information regarding the Company’s investment in unconsolidated joint venture partnerships.
Revenue Recognition
The Company must make estimates as to collectability of its accounts receivable related to rental income and straight-line rent. Management analyzes accounts receivable by considering customer creditworthiness, current economic trends, including the impact of the outbreak of COVID-19 on customers’ businesses, and customers’ ability to make payments on time and in full when evaluating the adequacy of the allowance for doubtful accounts receivable. As of September 30, 2020, the impact of COVID-19 on customer collectability has been minimal and has not had a material impact on the condensed consolidated financial statements. The allowance for doubtful accounts as of September 30, 2020 was approximately $6,000 and the Company had no allowance for doubtful accounts as of December 31, 2019.
3. REAL ESTATE ACQUISITIONS
During the nine months ended September 30, 2020, the Company acquired 100% of the following properties, which were determined to be asset acquisitions:
|
|
|
|
|
|
|
|
|
|
|
|
Number of |
|
Total Purchase |
|
($ in thousands) |
|
Acquisition Date |
|
Buildings |
|
Price (1) |
|
Norcross Industrial Center |
|
3/23/2020 |
|
1 |
|
$ |
9,505 |
Port 146 Distribution Center |
|
4/14/2020 |
|
1 |
|
|
9,571 |
Lima Distribution Center |
|
4/15/2020 |
|
1 |
|
|
11,622 |
Valwood Crossroads |
|
5/11/2020 |
|
2 |
|
|
69,999 |
Eaglepoint Logistics Center |
|
5/26/2020 |
|
1 |
|
|
40,216 |
7A Distribution Center II |
|
5/27/2020 |
|
1 |
|
|
23,218 |
Legacy Logistics Center |
|
6/3/2020 |
|
1 |
|
|
39,718 |
Logistics Center at 33 |
|
6/4/2020 |
|
1 |
|
|
63,285 |
Intermodal Logistics Center |
|
6/29/2020 |
|
1 |
|
|
28,628 |
Executive Airport II & III |
|
9/3/2020 |
|
2 |
|
|
33,200 |
Total Acquisitions |
|
|
|
12 |
|
$ |
328,962 |
(1) | Total purchase price is equal to the total consideration paid plus any debt assumed at fair value. There was no debt assumed in connection with the 2020 acquisitions. |
9
During the nine months ended September 30, 2020, the Company allocated the purchase price of its acquisitions to land, building and improvements, and intangible lease assets and liabilities as follows:
(1) | Total purchase price is equal to the total consideration paid plus any debt assumed at fair value. There was no debt assumed in connection with the 2020 acquisitions. |
Intangible and above-market lease assets are amortized over the remaining lease term. Below-market lease liabilities are amortized over the remaining lease term, plus any below-market, fixed-rate renewal option periods. The weighted-average amortization periods for the intangible lease assets and liabilities acquired in connection with the Company’s acquisitions during the nine months ended September 30, 2020, as of the respective date of each acquisition, was 6.3 years.
4. INVESTMENT IN REAL ESTATE
As of September 30, 2020 and December 31, 2019, the Company’s consolidated investment in real estate properties consisted of 57 and 45 industrial buildings, respectively.
|
|
|
|
|
|
|
|
|
As of |
||||
(in thousands) |
|
September 30, 2020 |
|
December 31, 2019 |
||
Land |
|
$ |
345,072 |
|
$ |
261,620 |
Building and improvements |
|
|
788,010 |
|
|
564,669 |
Intangible lease assets |
|
|
107,904 |
|
|
77,294 |
Construction in progress |
|
|
3,940 |
|
|
1,126 |
Investment in real estate properties |
|
|
1,244,926 |
|
|
904,709 |
Less accumulated depreciation and amortization |
|
|
(60,002) |
|
|
(25,988) |
Net investment in real estate properties |
|
$ |
1,184,924 |
|
$ |
878,721 |
Intangible Lease Assets and Liabilities
Intangible lease assets and liabilities as of September 30, 2020 and December 31, 2019 included the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of September 30, 2020 |
|
As of December 31, 2019 |
||||||||||||||
|
|
|
|
|
Accumulated |
|
|
|
|
|
|
|
Accumulated |
|
|
|
||
(in thousands) |
|
Gross |
|
Amortization |
|
Net |
|
Gross |
|
Amortization |
|
Net |
||||||
Intangible lease assets (1) |
|
$ |
106,008 |
|
$ |
(27,345) |
|
$ |
78,663 |
|
$ |
75,787 |
|
$ |
(11,734) |
|
$ |
64,053 |
Above-market lease assets (1) |
|
|
1,896 |
|
|
(576) |
|
|
1,320 |
|
|
1,507 |
|
|
(211) |
|
|
1,296 |
Below-market lease liabilities (2) |
|
|
(16,106) |
|
|
5,051 |
|
|
(11,055) |
|
|
(13,199) |
|
|
2,494 |
|
|
(10,705) |
(1) | Included in net investment in real estate properties on the condensed consolidated balance sheets. |
(2) | Included in other liabilities on the condensed consolidated balance sheets. |
10
Rental Revenue Adjustments and Depreciation and Amortization Expense
The following table summarizes straight-line rent adjustments, amortization recognized as an increase (decrease) to rental revenues from above-and below-market lease assets and liabilities, and real estate-related depreciation and amortization expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended |
|
For the Nine Months Ended |
||||||||
|
|
September 30, |
|
September 30, |
||||||||
(in thousands) |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
||||
Increase (Decrease) to Rental Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
Straight-line rent adjustments |
|
$ |
1,630 |
|
$ |
612 |
|
$ |
4,170 |
|
$ |
1,746 |
Above-market lease amortization |
|
|
(191) |
|
|
(70) |
|
|
(365) |
|
|
(114) |
Below-market lease amortization |
|
|
1,000 |
|
|
604 |
|
|
2,557 |
|
|
1,266 |
Real Estate-Related Depreciation and Amortization: |
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation expense |
|
$ |
6,980 |
|
$ |
3,629 |
|
$ |
18,039 |
|
$ |
7,469 |
Intangible lease asset amortization |
|
|
6,251 |
|
|
3,337 |
|
|
15,640 |
|
|
6,512 |
5. INVESTMENT IN UNCONSOLIDATED JOINT VENTURE PARTNERSHIPS
On July 15, 2020, the Company acquired, from a subsidiary of Industrial Property Trust (“IPT”), interests in two joint venture partnerships with third party investors for purposes of investing in industrial properties located in certain major U.S. distribution markets. The Company reports its investments in the Build-To-Core Industrial Partnership I LP (the “BTC I Partnership”) and the Build-To-Core Industrial Partnership II LP (the “BTC II Partnership” and, together with the BTC I Partnership, the “BTC Partnerships”) under the equity method on its consolidated balance sheets as the Company has the ability to exercise significant influence in each partnership but does not have control of the entities. See “Note 10” for further discussion of the transaction. The following table summarizes the Company’s investment in the BTC Partnerships:
(1) | Represents acquired or completed buildings. |
As of September 30, 2020, the book value of the Company’s investment in the BTC Partnerships was $301.3 million, which includes $168.2 million of outside basis difference. The outside basis difference represents the difference between the purchase price paid by the Company for the minority ownership interests in the joint venture partnerships, which was based on fair value, and the book value of the Company’s share of the underlying net assets and liabilities of the joint venture partnerships. This difference is a result of the fair value of the real estate and noncurrent nonfinancial assets and promote receivable at acquisition.
The following is a summary of certain operating data of the BTC I Partnership:
(1) | Includes a gain of $5.6 million for the nine months ended September 30, 2019 related to the disposal of two industrial buildings. There were no dispositions during the three and nine months ended September 30, 2020 or for the three months ended September 30, 2019. |
11
6. DEBT
The Company’s consolidated indebtedness is currently comprised of borrowings under its term loan and mortgage notes. Borrowings under the non-recourse mortgage notes are secured by mortgages or deeds of trust and related assignments and security interests in collateralized and certain cross-collateralized properties, which are generally owned by single purpose entities. A summary of the Company’s debt is as follows:
(1) | The effective interest rate is calculated based on either: (i) the London Interbank Offered Rate (“LIBOR”) plus a margin ranging from 1.30% to 2.10%; or (ii) an alternative base rate plus a margin ranging from 0.30% to 1.10%, each depending on the Company’s consolidated leverage ratio. Customary fall-back provisions apply if LIBOR is unavailable. The line of credit is available for general corporate purposes including, but not limited to, the acquisition and operation of permitted investments by the Company. As of September 30, 2020, total commitments for the line of credit were $315.0 million and the unused and available portions under the line of credit were both $314.9 million. |
(2) | The effective interest rate is calculated based on either (i) LIBOR plus a margin ranging from 1.25% to 2.05%; or (ii) an alternative base rate plus a margin ranging from 0.25% to 1.05%, depending on the Company’s consolidated leverage ratio. The weighted-average effective interest rate is the all-in interest rate, including the effects of interest rate swap agreements. As of September 30, 2020, total commitments for the term loan were $415.0 million, and there were no unused nor available amounts. This term loan is available for general corporate purposes including, but not limited to, the acquisition and operation of permitted investments by the Company. |
(3) | Interest rates range from 3.59% to 3.75%. The assets and credit of each of the Company’s consolidated properties pledged as collateral for the Company’s mortgage notes are not available to satisfy the Company’s other debt and obligations, unless the Company first satisfies the mortgage notes payable on the respective underlying properties. |
(4) | The weighted-average remaining term of the Company’s consolidated debt was approximately 3.5 years as of September 30, 2020, excluding any extension options on the line of credit. |
As of September 30, 2020, the principal payments due on the Company’s consolidated debt during each of the next five years and thereafter were as follows:
(1) | The line of credit matures in November 2023 and the term may be extended pursuant to a one-year extension option, subject to certain conditions. |
12
In July 2017, the Financial Conduct Authority (“FCA”) that regulates LIBOR announced it intends to stop compelling banks to submit rates for the calculation of LIBOR after 2021. As a result, the Federal Reserve Board and the Federal Reserve Bank of New York organized the Alternative Reference Rates Committee (“ARRC”), which identified the Secured Overnight Financing Rate (“SOFR”) as its preferred alternative rate for LIBOR in derivatives and other financial contracts. The Company is not able to predict when LIBOR will cease to be available or when there will be sufficient liquidity in the SOFR markets. Any changes adopted by the FCA or other governing bodies in the method used for determining LIBOR may result in a sudden or prolonged increase or decrease in reported LIBOR. If that were to occur, our interest payment could change. In addition, uncertainty about the extent and manner of future changes may result in interest rate and/or payments that are higher or lower than if LIBOR were to remain available in the current form.
As of September 30, 2020, the Company’s line of credit and term loan are the only consolidated indebtedness with maturities beyond 2021 that have exposure to LIBOR. The agreement governing the term loan provides procedures for determining a replacement or alternative base rate in the event that LIBOR is discontinued. However, there can be no assurances as to whether such replacement or alternative base rate will be more or less favorable than LIBOR. As of September 30, 2020, the Company has interest rate swaps in place to hedge LIBOR on $350.0 million of commitments under its term loan. The Company intends to monitor the developments with respect to the potential phasing out of LIBOR after 2021 and work with its lenders to seek to ensure any transition away from LIBOR will have minimal impact on its financial condition, but can provide no assurances regarding the impact of the discontinuation of LIBOR.
Debt Covenants
The Company’s line of credit, term loan and mortgage note agreements contain various property-level covenants, including customary affirmative and negative covenants. In addition, the line of credit and term loan agreements contain certain corporate level financial covenants, including leverage ratio, fixed charge coverage ratio, and tangible net worth thresholds. The Company was in compliance with all covenants as of September 30, 2020.
Derivative Instruments
To manage interest rate risk for certain of its variable-rate debt, the Company uses interest rate swaps as part of its risk management strategy. These derivatives are designed to mitigate the risk of future interest rate increases by providing a fixed interest rate for a limited, pre-determined period of time. Interest rate swaps designated as cash flow hedges involve the receipt of variable-rate amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the interest rate swap agreements without exchange of the underlying notional amount. Certain of the Company’s variable-rate borrowings are not hedged, and therefore, to an extent, the Company has on-going exposure to interest rate movements.
For derivative instruments that are designated and qualify as cash flow hedges, the gain or loss is recorded as a component of accumulated other comprehensive income (loss) (“AOCI”) on the condensed consolidated balance sheets and is reclassified into earnings as interest expense for the same period that the hedged transaction affects earnings, which is when the interest expense is recognized on the related debt. The gain or loss on the derivative instrument is presented in the same line item on the condensed consolidated statement of operations as the earnings effect of the hedged item.
During the next 12 months, the Company estimates that approximately $3.5 million will be reclassified as an increase to interest expense related to active effective hedges of existing floating-rate debt.
The following table summarizes the location and fair value of the cash flow hedges on the Company’s condensed consolidated balance sheets as of September 30, 2020 and December 31, 2019.
13
The following table presents the effect of the Company’s cash flow hedges on the Company’s condensed consolidated financial statements for the three and nine months ended September 30, 2020 and 2019.
7. FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company estimates the fair value of its financial instruments using available market information and valuation methodologies it believes to be appropriate for these purposes. Considerable judgment and a high degree of subjectivity are involved in developing these estimates and, accordingly, they are not necessarily indicative of amounts that the Company would realize upon disposition of its financial instruments.
Fair Value Measurements on a Recurring Basis
The following table presents the Company’s financial instruments measured at fair value on a recurring basis as of September 30, 2020 and December 31, 2019.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
(in thousands) |
|
Level 1 |
|
Level 2 |
|
Level 3 |
|
Fair Value |
||||
As of September 30, 2020 |
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
Derivative instruments |
|
$ |
— |
|
$ |
(10,942) |
|
$ |
— |
|
$ |
(10,942) |
Total liabilities measured at fair value |
|
$ |
— |
|
$ |
(10,942) |
|
$ |
— |
|
$ |
(10,942) |
As of December 31, 2019 |
|
|
|
|
|
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
Derivative instruments |
|
$ |
— |
|
$ |
2,190 |
|
$ |
— |
|
$ |
2,190 |
Total assets measured at fair value |
|
$ |
— |
|
$ |
2,190 |
|
$ |
— |
|
$ |
2,190 |
The following methods and assumptions were used to estimate the fair value of each class of financial instrument:
Derivative Instruments. The derivative instruments are interest rate swaps. The interest rate swaps are standard cash flow hedges whose fair value is estimated using market-standard valuation models. Such models involve using market-based observable inputs, including interest rate curves. The Company incorporates credit valuation adjustments to appropriately reflect both its nonperformance risk and the respective counterparty’s nonperformance risk in the fair value measurements, which the Company has concluded are not material to the valuation. Due to the interest rate swaps being unique and not actively traded, the fair value is classified as Level 2. See “Note 6” above for further discussion of the Company’s derivative instruments.
14
Nonrecurring Fair Value of Financial Measurements
As of September 30, 2020 and December 31, 2019, the fair values of cash and cash equivalents, restricted cash, tenant receivables, prepaid expenses, other assets, due from/to affiliates, accounts payable and accrued liabilities, and distributions payable approximate their carrying values due to the short-term nature of these instruments. The table below includes fair values for certain of the Company’s financial instruments for which it is practicable to estimate fair value. The carrying values and fair values of these financial instruments were as follows:
(1) | The carrying value reflects the principal amount outstanding. |
8. STOCKHOLDERS’ EQUITY
Public Offerings
On September 5, 2019, the Company’s initial public offering was terminated immediately upon effectiveness of the Company’s registration statement for its follow-on public offering of up to $2.0 billion of shares of its common stock, and the follow-on public offering commenced the same day. Under the follow-on public offering, the Company is offering up to $1.5 billion of shares of its common stock in the primary offering and up to $500.0 million of shares of its common stock pursuant to its distribution reinvestment plan, in any combination of Class T shares, Class W shares and Class I shares. The Company may reallocate amounts between the primary offering and distribution reinvestment plan. The Company’s follow-on public offering is a continuous offering that will end no later than September 5, 2021, unless extended in accordance with federal and state securities laws.
Pursuant to its public offerings, the Company offered and continues to offer shares of its common stock at the “transaction price,” plus applicable selling commissions and dealer manager fees. The “transaction price” generally is equal to the net asset value (“NAV”) per share of the Company’s common stock most recently disclosed. The Company’s NAV per share is calculated as of the last calendar day of each month for each of its outstanding classes of stock, and will be available generally within 15 calendar days after the end of the applicable month. Shares issued pursuant to the Company’s distribution reinvestment plan are offered at the transaction price, as indicated above, in effect on the distribution date. The Company may update a previously disclosed transaction price in cases where the Company believes there has been a material change (positive or negative) to its NAV per share relative to the most recently disclosed monthly NAV per share.
Summary of the Public Offerings
A summary of the Company’s public offerings, including shares sold through the primary offering and the Company’s distribution reinvestment plan (“DRIP”), as of September 30, 2020, is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands) |
|
Class T |
|
Class W |
|
Class I |
|
Total |
||||
Amount of gross proceeds raised: |
|
|
|
|
|
|
|
|
|
|
|
|
Primary offering |
|
$ |
1,232,304 |
|
$ |
63,060 |
|
$ |
23,478 |
|
$ |
1,318,842 |
DRIP |
|
|
28,901 |
|
|
1,408 |
|
|
750 |
|
|
31,059 |
Total offering |
|
$ |
1,261,205 |
|
$ |
64,468 |
|
$ |
24,228 |
|
$ |
1,349,901 |
Number of shares issued: |
|
|
|
|
|
|
|
|
|
|
|
|
Primary offering |
|
|
117,185 |
|
|
6,274 |
|
|
2,356 |
|
|
125,815 |
DRIP |
|
|
2,875 |
|
|
140 |
|
|
75 |
|
|
3,090 |
Stock grants |
|
|
— |
|
|
6 |
|
|
3 |
|
|
9 |
Total offering |
|
|
120,060 |
|
|
6,420 |
|
|
2,434 |
|
|
128,914 |
15
Common Stock
The following table summarizes the changes in the shares outstanding for each class of common stock for the periods presented below:
|
|
|
|
|
|
|
|
|
|
|
Class T |
|
Class W |
|
Class I |
|
Total |
(in thousands) |
|
Shares |
|
Shares |
|
Shares |
|
Shares |
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2019 |
|
|
|
|
|
|
|
|
Balance as of June 30, 2019 |
|
34,722 |
|
1,480 |
|
791 |
|
36,993 |
Issuance of common stock: |
|
|
|
|
|
|
|
|
Primary shares |
|
6,315 |
|
713 |
|
257 |
|
7,285 |
DRIP |
|
249 |
|
12 |
|
7 |
|
268 |
Redemptions |
|
(41) |
|
— |
|
(1) |
|
(42) |
Balance as of September 30, 2019 |
|
41,245 |
|
2,205 |
|
1,054 |
|
44,504 |
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2020 |
|
|
|
|
|
|
|
|
Balance as of June 30, 2020 |
|
110,468 |
|
5,566 |
|
2,398 |
|
118,432 |
Issuance of common stock: |
|
|
|
|
|
|
|
|
Primary shares |
|
8,580 |
|
723 |
|
231 |
|
9,534 |
DRIP |
|
757 |
|
42 |
|
18 |
|
817 |
Stock grants |
|
— |
|
— |
|
28 |
|
28 |
Redemptions |
|
(173) |
|
(5) |
|
(3) |
|
(181) |
Balance as of September 30, 2020 |
|
119,632 |
|
6,326 |
|
2,672 |
|
128,630 |
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2019 |
|
|
|
|
|
|
|
|
Balance as of December 31, 2018 |
|
19,759 |
|
161 |
|
345 |
|
20,265 |
Issuance of common stock: |
|
|
|
|
|
|
|
|
Primary shares |
|
20,960 |
|
2,024 |
|
690 |
|
23,674 |
DRIP |
|
599 |
|
20 |
|
13 |
|
632 |
Stock grants |
|
— |
|
— |
|
76 |
|
76 |
Redemptions |
|
(73) |
|
— |
|
(70) |
|
(143) |
Balance as of September 30, 2019 |
|
41,245 |
|
2,205 |
|
1,054 |
|
44,504 |
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2020 |
|
|
|
|
|
|
|
|
Balance as of December 31, 2019 |
|
45,240 |
|
2,736 |
|
1,299 |
|
49,275 |
Issuance of common stock: |
|
|
|
|
|
|
|
|
Primary shares |
|
72,869 |
|
3,536 |
|
1,103 |
|
77,508 |
DRIP |
|
1,798 |
|
103 |
|
44 |
|
1,945 |
Stock grants |
|
— |
|
— |
|
229 |
|
229 |
Redemptions |
|
(275) |
|
(49) |
|
(3) |
|
(327) |
Balance as of September 30, 2020 |
|
119,632 |
|
6,326 |
|
2,672 |
|
128,630 |
16
Distributions
The following table summarizes the Company’s distribution activity (including distributions reinvested in shares of the Company’s common stock) for each of the quarters ended below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount |
|||||||||||||
|
|
Declared per |
|
Paid in |
|
Reinvested |
|
Distribution |
|
Gross |
|||||
(in thousands, except per share data) |
|
Common Share (1) |
|
Cash |
|
in Shares |
|
Fees (2) |
|
Distributions (3) |
|||||
2020 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30 |
|
$ |
0.13625 |
|
$ |
5,601 |
|
$ |
8,451 |
|
$ |
2,952 |
|
$ |
17,004 |
June 30 |
|
|
0.13625 |
|
|
5,194 |
|
|
7,812 |
|
|
2,710 |
|
|
15,716 |
March 31 |
|
|
0.13625 |
|
|
3,339 |
|
|
5,077 |
|
|
1,742 |
|
|
10,158 |
Total |
|
$ |
0.40875 |
|
$ |
14,134 |
|
$ |
21,340 |
|
$ |
7,404 |
|
$ |
42,878 |
2019 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31 |
|
$ |
0.13625 |
|
$ |
2,058 |
|
$ |
3,242 |
|
$ |
1,105 |
|
$ |
6,405 |
September 30 |
|
|
0.13625 |
|
|
1,841 |
|
|
2,866 |
|
|
992 |
|
|
5,699 |
June 30 |
|
|
0.13625 |
|
|
1,558 |
|
|
2,319 |
|
|
818 |
|
|
4,695 |
March 31 |
|
|
0.13625 |
|
|
1,178 |
|
|
1,744 |
|
|
620 |
|
|
3,542 |
Total |
|
$ |
0.54500 |
|
$ |
6,635 |
|
$ |
10,171 |
|
$ |
3,535 |
|
$ |
20,341 |
(1) | Amounts reflect the quarterly distribution rate authorized by the Company’s board of directors per Class T share, per Class W share, and per Class I share of common stock. Distributions were declared and paid as of monthly record dates. These monthly distributions have been aggregated and presented on a quarterly basis. The distributions on Class T shares and Class W shares of common stock are reduced by the respective distribution fees that are payable with respect to such Class T shares and Class W shares. |
(2) | Distribution fees are paid monthly to Black Creek Capital Markets, LLC (the “Dealer Manager”) with respect to Class T shares and Class W shares issued in the primary portion of the Company’s public offerings only. |
(3) | Gross distributions are total distributions before the deduction of any distribution fees relating to Class T shares and Class W shares issued in the primary portion of the Company’s public offerings. |
Redemptions
The following table summarizes the Company’s redemption activity for the periods presented below:
|
|
|
|
|
|
|
|
|
For the Nine Months Ended September 30, |
||||
(in thousands, except per share data) |
|
2020 |
|
2019 |
||
Number of eligible shares redeemed |
|
|
327 |
|
|
142 |
Aggregate dollar amount of shares redeemed |
|
$ |
3,215 |
|
$ |
1,405 |
Average redemption price per share |
|
$ |
9.83 |
|
$ |
9.87 |
9. NONCONTROLLING INTERESTS
During the nine months ended September 30, 2020, the Company acquired controlling interests in one subsidiary real estate investment trust (the “Subsidiary REIT”) that owns one building for a total purchase price of $22.4 million. The Company indirectly owns and controls the respective managing member of the Subsidiary REIT. Noncontrolling interests represent the portion of equity in the Subsidiary REIT that the Company does not own. Such noncontrolling interests are equity instruments presented in the condensed consolidated balance sheet as of September 30, 2020 as noncontrolling interests within permanent equity. The noncontrolling interests consist of redeemable preferred shares with a 12.5% annual preferred dividend. The Subsidiary REIT has 125 preferred shares issued and outstanding at a par value of $1,000 per share, for an aggregate amount of $125,000. The preferred shares are non-voting and have no rights to income or loss. The preferred shares are redeemable by the respective Subsidiary REIT at the discretion of the Company, through its ownership and control of the managing member, for $1,000 per share, plus accumulated and unpaid dividends. As of September 30, 2020, the Subsidiary REIT had preferred dividends payable in the amount of approximately $3,900, which were recorded in distributions payable on the Company’s condensed consolidated balance sheet.
17
10. RELATED PARTY TRANSACTIONS
Summary of Fees and Expenses
The table below summarizes the fees and expenses incurred by the Company for services provided by BCI IV Advisors LLC (the “Advisor”) and its affiliates, and by the Dealer Manager related to the services the Dealer Manager provided in connection with the Company’s public offerings and any related amounts payable:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended September 30, |
|
For the Nine Months Ended September 30, |
|
Payable as of |
||||||||||||
(in thousands) |
|
2020 |
|
2019 |
|
2020 |
|
2019 |
|
September 30, 2020 |
|
December 31, 2019 |
||||||
Expensed: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Advisory fee—fixed component |
|
$ |
2,561 |
|
$ |
1,367 |
|
$ |
6,457 |
|
$ |
2,948 |
|
$ |
895 |
|
$ |
593 |
Advisory fee—performance component |
|
|
2,935 |
|
|
784 |
|
|
6,195 |
|
|
1,938 |
|
|
6,195 |
|
|
2,913 |
Acquisition expense reimbursements (1) |
|
|
750 |
|
|
793 |
|
|
2,199 |
|
|
2,367 |
|
|
770 |
|
|
182 |
Other expense reimbursements (2) |
|
|
730 |
|
|
482 |
|
|
2,223 |
|
|
1,445 |
|
|
367 |
|
|
473 |
Total |
|
$ |
6,976 |
|
$ |
3,426 |
|
$ |
17,074 |
|
$ |
8,698 |
|
$ |
8,227 |
|
$ |
4,161 |
Additional Paid-In Capital: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling commissions |
|
$ |
2,257 |
|
$ |
1,695 |
|
$ |
19,722 |
|
$ |
5,301 |
|
$ |
— |
|
$ |
— |
Dealer manager fees |
|
|
1,795 |
|
|
1,293 |
|
|
14,687 |
|
|
4,623 |
|
|
— |
|
|
— |
Offering costs (3) |
|
|
1,774 |
|
|
1,449 |
|
|
5,864 |
|
|
4,347 |
|
|
19,185 |
|
|
21,269 |
Distribution fees—current |
|
|
2,952 |
|
|
992 |
|
|
7,404 |
|
|
2,430 |
|
|
992 |
|
|
389 |
Distribution fees—trailing (4) |
|
|
1,226 |
|
|
2,261 |
|
|
26,155 |
|
|
8,101 |
|
|
42,624 |
|
|
16,467 |
Total |
|
$ |
10,004 |
|
$ |
7,690 |
|
$ |
73,832 |
|
$ |
24,802 |
|
$ |
62,801 |
|
$ |
38,125 |
(1) | Reflects amounts reimbursable to the Advisor for all expenses incurred by the Advisor and its affiliates on the Company’s behalf in connection with the selection, acquisition, development or origination of an asset. Beginning January 1, 2020, the Company either pays directly or reimburses the Advisor for such expenses. |
(2) | Other expense reimbursements include certain expenses incurred in connection with the services provided to the Company under the advisory agreement. These reimbursements include a portion of compensation expenses of individual employees of the Advisor, including certain of the Company’s named executive officers, related to services for which the Advisor does not otherwise receive a separate fee. A portion of the compensation received by certain employees of the Advisor and its affiliates may be in the form of a restricted stock grant awarded by the Company. The Company shows these as reimbursements to the Advisor to the same extent that the Company recognizes the related share-based compensation on its condensed consolidated statements of operations. The Company reimbursed the Advisor approximately $0.6 million and $0.5 million for the three months ended September 30, 2020 and 2019, respectively, and $2.0 million and $1.3 million for the nine months ended September 30, 2020 and 2019, respectively, for such compensation expenses. The remaining amount of other expense reimbursements relate to other general overhead and administrative expenses including, but not limited to, allocated rent paid to both third parties and affiliates of the Advisor, equipment, utilities, insurance, travel and entertainment. |
(3) | The Company is reimbursing the Advisor for all organization and offering costs incurred on its behalf as of December 31, 2019 ratably over 60 months. Since January 1, 2020, the Company either pays directly or reimburses the Advisor for offering costs as and when incurred. |
(4) | The distribution fees accrue daily and are payable monthly in arrears. The monthly amount of distribution fees payable is included in distributions payable on the condensed consolidated balance sheets. Additionally, the Company accrues for estimated trailing amounts payable based on the shares outstanding as of the balance sheet date, which are included in distribution fees payable to affiliates on the condensed consolidated balance sheets. All or a portion of the distribution fees are reallowed or advanced by the Dealer Manager to unaffiliated participating broker dealers and broker dealers servicing accounts of investors who own Class T shares and/or Class W shares. |
18
Interests Purchase
On July 15, 2020, the Company acquired interests in two portfolios comprised of 64 acquired or completed buildings and 18 buildings under construction or in the pre-construction phase. As a result of the acquisition, the Company owns a 19.9% limited partner interest in the BTC I Partnership, a 0.1% general partner interest in the BTC I Partnership, a 7.9% limited partner interest in the BTC II Partnership, and a 0.1% general partner interest in the BTC II Partnership (collectively, the “Interests”). The purchase price for the Interests was $301.0 million in cash paid at closing, exclusive of due diligence expenses and other closing costs. The Company funded the acquisition of the Interests using proceeds from its public offering.
The Company acquired the Interests from Industrial Property Operating Partnership LP (“IPT OP”), a subsidiary of IPT, which was a Maryland statutory trust that was advised by Industrial Property Advisors LLC (the “IPT Advisor”), an affiliate of the Company’s Advisor. IPT terminated its existence on July 28, 2020, following the sale of its interests in the BTC Partnerships. The Company and IPT also had certain common officers. Certain former officers of IPT and certain former trustees of the IPT board of trustees (the “IPT Board”) are also stockholders of the Company. Prior to the termination of IPT, the Company and IPT were also sponsored by affiliates of Black Creek Group, LLC, and such sponsors held partnership units in the operating partnerships of the Company and IPT, respectively, and certain former trustees of IPT were also members of the Company’s board of directors. The IPT Board and the Company’s board of directors each established a special committee of independent trustees or directors, as applicable, to review and approve the agreements between the Company and IPT OP and the transactions contemplated thereby, including the sale of the Interests. The members of the IPT special committee did not overlap with members of the Company’s special committee, and none of the members of the Company’s special committee were trustees of IPT. All of the members of the Company’s special committee were disinterested in the transactions, including the sale of the Interests. Each of the special committees engaged legal counsel and an independent financial advisor to assist the special committees in their evaluation and negotiation of the transactions. CBRE Capital Advisors, Inc., the independent financial advisor to the IPT special committee, delivered a fairness opinion to the IPT special committee. Duff & Phelps, the independent financial advisor to the Company special committee, delivered a fairness opinion to the Company special committee. The agreements between the Company and IPT OP and the transactions contemplated thereby, including the sale of the Interests, were approved by the special committees of each of the Company and IPT.
BTC I Services Agreement and Incentive Distributions Sharing
Pursuant to the Fourth Amended and Restated Agreement of Limited Partnership of the BTC I Partnership, as amended (the “BTC I Partnership Agreement”), the Company, as the general partner of the BTC I Partnership (the “BTC I GP”) will provide, directly or indirectly by appointing an affiliate or a third party, acquisition and asset management services and, to the extent applicable, development management and development oversight services (the “BTC I Advisory Services”). As compensation for providing the BTC I Advisory Services, the BTC I Partnership will pay the BTC I GP, or its designee, certain fees in accordance with the terms of the BTC I Partnership Agreement. On February 12, 2015, the BTC I GP and IPT Advisor and an entity owned by affiliates of the Advisor, entered into an agreement that the IPT Advisor subsequently assigned to Industrial Property Advisors Sub I LLC (the “BTC I SLP”), an entity owned by affiliates of the Advisor. Pursuant to this agreement (the “BTC I Services Agreement”), the BTC I GP appointed the BTC I SLP to provide the BTC I Advisory Services and assigned to the BTC I SLP the fees payable pursuant to the BTC I Partnership Agreement for providing the BTC I Advisory Services. As a result of the payment of the fees pursuant to the BTC I Services Agreement, the fees payable to the Advisor pursuant to the Advisory Agreement will be reduced by the product of (i) the fees actually paid to the BTC I SLP pursuant to the BTC I Services Agreement, and (ii) the percentage interest of the BTC I Partnership owned by the Company through its general partner and limited partner interests.
In connection with the sale of the Interests, the parties to the BTC I Services Agreement amended such agreement to make certain conforming changes to reflect the new indirect ownership structure of the BTC I Partnership as a result of the sale of the Interests.
In addition, the BTC I Partnership Agreement contains procedures for making distributions to the parties, including incentive distributions to the BTC I GP and the BTC I SLP, which are subject to certain return thresholds being achieved. The BTC I GP and the BTC I SLP have agreed to split such incentive distributions such that the BTC I SLP will receive 60% of the incentive distributions attributable to interests in the BTC I Partnership which are not owned by the BTC I GP or the BTC I LP.
Pursuant to the BTC I Partnership Agreement, the partners will be obligated to make capital contributions in proportion to their respective partnership interests with respect to each approved investment as well as with respect to any additional capital calls the BTC I GP makes from time to time, including with respect to the funding of incentive distributions, certain preservation costs, certain limited operating and capital variances and other items.
19
Pursuant to an agreement between the BTC I SLP and the subsidiaries through which the Company owns its general partner and limited partner interests in the BTC I Partnership, dated September 15, 2016, if the Company proposes to transfer all (but not less than all) of its respective interests in the BTC I Partnership to an unrelated third party, then the Company can require the BTC I SLP to transfer its special limited partnership interest to the purchaser on the same terms and conditions.
BTC II Services Agreement and Incentive Distributions Sharing
Pursuant to the Agreement of Limited Partnership of the BTC II Partnership, as amended (the “BTC II Partnership Agreement”), the Company, as the general partner of the BTC II Partnership (the “BTC II GP”) will provide, directly or indirectly by appointing an affiliate or a third party, acquisition and asset management services and, to the extent applicable, development management and development oversight services (the “BTC II Advisory Services”). As compensation for providing the BTC II Advisory Services, the BTC II Partnership will pay the BTC II GP, or its designee, certain fees in accordance with the terms of the BTC II Partnership Agreement. On May 19, 2017, the BTC II GP and Industrial Property Advisors Sub III LLC (the “BTC II Service Provider”), an entity owned by affiliates of the Advisor, entered into that certain agreement (the “BTC II Services Agreement”), pursuant to which the BTC II GP appointed the BTC II Service Provider to provide the BTC II Advisory Services and assigned to the BTC II Service Provider the fees payable pursuant to the BTC II Partnership Agreement for providing the BTC II Advisory Services. As a result of the payment of the fees pursuant to the BTC II Services Agreement, the fees payable to the Advisor pursuant to the Advisory Agreement will be reduced by the product of (i) the fees actually paid to the BTC II Service Provider pursuant to the BTC II Services Agreement, and (ii) the percentage interest of the BTC II Partnership owned by the Company through its general partner and limited partner interests.
In connection with the sale of the Interests, the parties to the BTC II Services Agreement amended such agreement to make certain conforming changes to reflect the new indirect ownership structure of the BTC II Partnership as a result of the sale of the Interests.
In addition, the BTC II Partnership Agreement contains procedures for making distributions to the parties, including incentive distributions to the BTC II GP and Industrial Property Advisors Sub IV LLC (the “BTC II SLP”), an entity owned by affiliates of the Advisor, which are subject to certain return thresholds being achieved. The BTC II GP and the BTC II SLP have agreed to split such incentive distributions such that the BTC II SLP will receive 80% of the incentive distributions attributable to interests in the BTC II Partnership which are not owned by the Company through its general partner and limited partner interests.
Pursuant to the BTC II Partnership Agreement, the partners will be obligated to make capital contributions in proportion to their respective partnership interests with respect to each approved investment as well as with respect to any additional capital calls the BTC II GP makes from time to time, including with respect to the funding of incentive distributions, certain preservation costs, certain limited operating and capital variances and other items.
Joint Venture Partnership Fees
For the period from July 16, 2020 through September 30, 2020, the BTC Partnerships (as described in “Note 5”) incurred in aggregate approximately $2.9 million in acquisition and asset management fees, which were paid to affiliates of the Advisor pursuant to the respective service agreements. As of September 30, 2020, the Company had amounts due from the BTC Partnerships in aggregate of approximately $14,000, which were recorded in due from affiliates on the condensed consolidated balance sheets.
Advisory Agreement
On July 15, 2020, in connection with the acquisition of the Interests, the Company, BCI IV Operating Partnership LP, the Company’s operating partnership (the “Operating Partnership”), and the Advisor entered into Amendment No. 1 (“Amendment No. 1”) to the Amended and Restated Advisory Agreement (2020), dated as of June 12, 2020. Amendment No. 1 provides that the Advisor shall receive a development fee in connection with providing services related to the development, construction, improvement or stabilization, including tenant improvements, of development properties or overseeing the provision of these services by third parties on behalf of the Company. The fee will be an amount that will be equal to 4.0% of total project cost of the development property (or the Company’s proportional interest therein with respect to real property held in joint ventures or other entities that are co-owned). If the Advisor engages a third party to provide development services, the third party will be compensated directly by the Company, and the Advisor will receive the development fee if it provides development oversight services.
20
Expense Support Agreement
The table below provides information regarding the fees deferred and expense support provided by the Advisor, pursuant to the expense support agreement, which has been extended through December 31, 2020. Refer to Item 8, “Financial Statements and Supplementary Data” in the Company’s 2019 Form 10-K for a description of the expense support agreement. As of September 30, 2020, the aggregate amount paid by the Advisor pursuant to the expense support agreement was $27.1 million. Of this amount, total reimbursements to the Advisor were $21.2 million, including $20.2 million that has been paid and $1.0 million that remains to be paid, and $5.9 million remains available to be reimbursed, subject to certain conditions.
(1) | As of September 30, 2020 and December 31, 2019, approximately $1.0 million and $5.4 million, respectively, was payable to the Advisor by the Company and is included in due to affiliates on the condensed consolidated balance sheets. |
11. SUPPLEMENTAL CASH FLOW INFORMATION
Supplemental cash flow information and disclosure of non-cash investing and financing activities is as follows:
|
|
|
|
|
|
|
|
|
For the Nine Months Ended September 30, |
||||
(in thousands) |
|
2020 |
|
2019 |
||
Distributions payable |
|
$ |
5,862 |
|
$ |
2,024 |
Distribution fees payable to affiliates |
|
|
42,624 |
|
|
15,560 |
Distributions reinvested in common stock |
|
|
19,564 |
|
|
6,346 |
Accrued offering costs |
|
|
19,185 |
|
|
18,466 |
Redeemable noncontrolling interest issued as settlement of performance component of the advisory fee |
|
|
2,913 |
|
|
723 |
Accrued acquisition expense reimbursements |
|
|
770 |
|
|
4,016 |
Non-cash selling commissions and dealer manager fees |
|
|
34,409 |
|
|
9,924 |
Mortgage notes assumed on real estate acquisitions at fair value |
|
|
— |
|
|
50,418 |
Restricted Cash
The following table presents the components of the beginning of period and end of period cash, cash equivalents and restricted cash reported within the condensed consolidated statements of cash flows:
|
|
|
|
|
|
|
|
|
For the Nine Months Ended September 30, |
||||
(in thousands) |
|
2020 |
|
2019 |
||
Beginning of period: |
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
51,178 |
|
$ |
19,016 |
Restricted cash (1) |
|
|
— |
|
|
5 |
Cash, cash equivalents and restricted cash |
|
$ |
51,178 |
|
$ |
19,021 |
End of period: |
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
180,683 |
|
$ |
49,384 |
Restricted cash (2) |
|
|
— |
|
|
— |
Cash, cash equivalents and restricted cash |
|
$ |
180,683 |
|
$ |
49,384 |
(1) | As of December 31, 2019, the Company did not have any restricted cash. As of December 31, 2018, restricted cash consisted of cash held in escrow in connection with certain estimated property improvements. |
(2) | As of September 30, 2020 and September 30, 2019, the Company did not have any restricted cash. |
21
12. SIGNIFICANT RISKS AND UNCERTAINTIES
Significant Risks and Uncertainties
Currently, one of the most significant risks and uncertainties is the adverse effect of the current novel coronavirus (COVID-19) pandemic. The extent of the impact from COVID-19 on the commercial real estate sector continues to vary dramatically across real estate property types and markets, with certain property segments such as hospitality, gaming, shopping malls, senior housing, and student living being impacted particularly hard. While not immune to the effects of COVID-19, the industrial property sector in which the Company invests continues to remain relatively resilient; however, the Company has had customers request rent deferral or rent abatement during this pandemic. The outbreak has triggered a period of global economic slowdown and could trigger a global recession.
The COVID-19 pandemic could have material and adverse effects on the Company’s financial condition, results of operations and cash flows in the near term due to, but not limited to, the following:
● | reduced economic activity severely impacts the Company’s customers’ businesses, financial condition and liquidity and may cause customers to be unable to fully meet their obligations to the Company or to otherwise seek modifications of such obligations, resulting in increases in uncollectible receivables and reductions in rental income; |
● | the negative financial impact of the pandemic could impact the Company’s future compliance with financial covenants of the Company’s credit facility and other debt agreements; and |
● | weaker economic conditions could cause the Company to recognize impairment in value of its tangible or intangible assets. |
The Company is closely monitoring the impact of the COVID-19 pandemic on all aspects of its business, including how it will impact its customers and business partners. While the Company did not incur significant disruptions during the nine months ended September 30, 2020 from the COVID-19 pandemic, it is unable to predict the impact that the COVID-19 pandemic will have on its future financial condition, results of operations and cash flows due to numerous uncertainties and the impact could be material. The extent to which the COVID-19 pandemic impacts the Company’s operations and those of the Company’s customers will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the scope, severity and duration of the pandemic, the actions taken to contain the pandemic or mitigate its impact, and the direct and indirect economic effects of the pandemic and containment measures, among others.
13. COMMITMENTS AND CONTINGENCIES
The Company and the Operating Partnership are not presently involved in any material litigation nor, to the Company’s knowledge, is any material litigation threatened against the Company or its subsidiaries.
Environmental Matters
A majority of the properties the Company acquires have been or will be subject to environmental reviews either by the Company or the previous owners. In addition, the Company may incur environmental remediation costs associated with certain land parcels it may acquire in connection with the development of land. The Company has or may acquire certain properties in urban and industrial areas that may have been leased to or previously owned by commercial and industrial companies that discharged hazardous material. The Company may purchase various environmental insurance policies to mitigate its exposure to environmental liabilities. The Company is not aware of any environmental liabilities that it believes would have a material adverse effect on its business, financial condition, or results of operations as of September 30, 2020.
14. SUBSEQUENT EVENTS
Status of the Public Offerings
As of November 4, 2020, the Company had raised gross proceeds of $1.4 billion from the sale of 137.7 million shares of its common stock in its public offerings, including $37.0 million from the sale of 3.7 million shares of its common stock through its distribution reinvestment plan. As of November 4, 2020, approximately $1.0 billion in shares of the Company’s common stock remained available for sale pursuant to its follow-on public offering in any combination of Class T shares, Class W shares or Class I shares, including approximately $471.4 million in shares of common stock available for sale through its distribution reinvestment plan, which may be reallocated for sale in the Company’s primary offering.
22
Completed Acquisitions
On October 9, 2020, the Company acquired two industrial buildings located in the Cincinnati market. The total purchase price was approximately $30.2 million, exclusive of transfer taxes, due diligence expenses, acquisition costs and other closing costs.
Acquisitions Under Contract
The Company has entered into contracts to acquire properties with an aggregate contract purchase price of approximately $54.8 million, comprised of four industrial buildings. There can be no assurance that the Company will complete the acquisition of the properties under contract.
Status of Secured Mortgage Notes
Subsequent to September 30, 2020, the Company entered into a secured fixed-rate mortgage note in the amount of $118.5 million with an interest rate of 2.90% and a term of seven years. The assets and credit of each of the Company’s properties pledged as collateral for the Company’s mortgage notes are not available to satisfy the Company’s other debt and obligations, unless the Company first satisfies the mortgage notes payable on the respective underlying properties.
23
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
References to the terms “we,” “our,” or “us” refer to Black Creek Industrial REIT IV Inc. and its consolidated subsidiaries. The following discussion and analysis should be read together with our unaudited condensed consolidated financial statements and notes thereto included in this Quarterly Report on Form 10-Q.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q includes certain statements that may be deemed forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Such forward-looking statements relate to, without limitation, our ability to raise capital and effectively and timely deploy the net proceeds of our public offering, the expected use of net proceeds from the public offering, our reliance on the Advisor and BCI IV Advisors Group LLC (the “Sponsor”), our understanding of our competition and our ability to compete effectively, our financing needs, our expected leverage, the effects of our current strategies, rent and occupancy growth, general conditions in the geographic area where we will operate, our future debt and financial position, our future capital expenditures, future distributions and acquisitions (including the amount and nature thereof), other developments and trends of the real estate industry, investment strategies and the expansion and growth of our operations. Forward-looking statements are generally identifiable by the use of the words “may,” “will,” “should,” “expect,” “could,” “intend,” “plan,” “anticipate,” “estimate,” “believe,” “continue,” “project,” or the negative of these words or other comparable terminology. These statements are not guarantees of future performance, and involve certain risks, uncertainties and assumptions that are difficult to predict.
The forward-looking statements included herein are based upon our current expectations, plans, estimates, assumptions, and beliefs that involve numerous risks and uncertainties. Assumptions relating to the foregoing involve judgments with respect to, among other things, present and future economic, competitive and market conditions, and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond our control. Although we believe that the expectations reflected in such forward-looking statements are based on reasonable assumptions, our actual results and performance could differ materially from those set forth in the forward-looking statements. Factors that could have a material adverse effect on our operations and future prospects include, but are not limited to:
● | Our ability to raise capital and effectively deploy the net proceeds raised in our public offerings in accordance with our investment strategy and objectives; |
● | The failure of properties to perform as we expect; |
● | Risks associated with acquisitions, dispositions and development of properties; |
● | Our failure to successfully integrate acquired properties and operations; |
● | Unexpected delays or increased costs associated with any development projects; |
● | The availability of cash flows from operating activities for distributions and capital expenditures; |
● | Defaults on or non-renewal of leases by customers, lease renewals at lower than expected rent, or failure to lease properties at all or on favorable rents and terms; |
● | Difficulties in economic conditions generally and the real estate, debt, and securities markets specifically, including those related to the COVID-19 pandemic; |
● | Legislative or regulatory changes, including changes to the laws governing the taxation of real estate investment trusts (“REITs”); |
● | Our failure to obtain, renew, or extend necessary financing or access the debt or equity markets; |
● | Conflicts of interest arising out of our relationships with the Sponsor, the Advisor, and their affiliates; |
● | Risks associated with using debt to fund our business activities, including re-financing and interest rate risks; |
● | Increases in interest rates, operating costs, or greater than expected capital expenditures; |
● | Changes to GAAP; and |
● | Our ability to continue to qualify as a REIT. |
24
Any of the assumptions underlying forward-looking statements could prove to be inaccurate. Our stockholders are cautioned not to place undue reliance on any forward-looking statements included in this Quarterly Report on Form 10-Q. All forward-looking statements are made as of the date of this Quarterly Report on Form 10-Q and the risk that actual results will differ materially from the expectations expressed in this Quarterly Report on Form 10-Q will increase with the passage of time. Except as otherwise required by the federal securities laws, we undertake no obligation to publicly update or revise any forward-looking statements after the date of this Quarterly Report on Form 10-Q, whether as a result of new information, future events, changed circumstances, or any other reason. In light of the significant uncertainties inherent in the forward-looking statements included in this Quarterly Report on Form 10-Q, including, without limitation, the risks described under “Risk Factors,” the inclusion of such forward-looking statements should not be regarded as a representation by us or any other person that the objectives and plans set forth in this Quarterly Report on Form 10-Q will be achieved.
OVERVIEW
General
Black Creek Industrial REIT IV Inc. is a Maryland corporation formed on August 12, 2014 to make investments in income-producing real estate assets consisting primarily of high-quality distribution warehouses and other industrial properties that are leased to creditworthy corporate customers. We currently operate as a REIT for U.S. federal income tax purposes, and elected to be treated as a REIT beginning with our taxable year ended December 31, 2017. We utilize an Umbrella Partnership Real Estate Investment Trust (“UPREIT”) organizational structure to hold all or substantially all of our assets through the Operating Partnership.
On September 5, 2019, our initial public offering was terminated immediately upon the effectiveness of our registration statement for our follow-on public offering of up to $2.0 billion of shares of our common stock, and the follow-on public offering commenced the same day. Under the follow-on public offering, we are offering up to $1.5 billion of shares of our common stock in our primary offering and up to $500.0 million of shares of our common stock pursuant to our distribution reinvestment plan, in any combination of Class T shares, Class W shares and Class I shares. We may reallocate amounts between the primary offering and distribution reinvestment plan. Our follow-on public offering is a continuous offering that will end no later than September 5, 2021, unless extended in accordance with federal securities laws.
Pursuant to our public offerings, we offered and continue to offer shares of our common stock at the “transaction price,” plus applicable selling commissions and dealer manager fees. The “transaction price” generally is equal to the net asset value (“NAV”) per share of our common stock most recently disclosed. Our NAV per share is calculated as of the last calendar day of each month for each of our outstanding classes of common stock, and is available generally within 15 calendar days after the end of the applicable month. Shares issued pursuant to our distribution reinvestment plan are offered at the transaction price, as indicated above, in effect on the distribution date. We may update a previously disclosed transaction price in cases where we believe there has been a material change (positive or negative) to our NAV per share relative to the most recently disclosed monthly NAV per share. See “Net Asset Value” below for further detail.
As of September 30, 2020, we had raised gross proceeds of approximately $1.3 billion from the sale of 128.9 million shares of our common stock and the issuance of notes payable in our public offerings, including shares issued pursuant to our distribution reinvestment plan. See “Note 8 to the Condensed Consolidated Financial Statements” for information concerning our public offerings.
On July 15, 2020, we acquired minority ownership interests in two joint venture partnerships, the BTC I Partnership and the BTC II Partnership, with third party investors for $301.0 million in cash paid at closing, exclusive of due diligence expenses and other closing costs. As of the date of acquisition, the joint venture partnerships’ aggregate real estate portfolios consisted of 64 acquired or completed buildings and 18 buildings under construction or in the pre-construction phase.
As of September 30, 2020, we owned and managed, either directly or through our minority ownership interests in our joint venture partnerships (which are presented as if we own a 100% interest), a total real estate portfolio that included 124 industrial buildings totaling approximately 29.4 million square feet located in 23 markets throughout the U.S., with 191 customers, and was 81.1% occupied (86.3% leased) with a weighted-average remaining lease term (based on square feet) of 4.8 years. The occupied rate reflects the square footage with a paying customer in place. The leased rate includes the occupied square footage and additional square footage with leases in place that have not yet commenced. As of September 30, 2020, our total real estate portfolio included:
● | 108 industrial buildings totaling approximately 26.0 million square feet comprised our operating portfolio, which includes stabilized properties, and was 90.8% occupied (94.3% leased); and |
25
● | 16 industrial buildings totaling approximately 3.4 million square feet comprised our value-add portfolio, which includes buildings acquired with the intention to reposition or redevelop, or buildings recently completed which have not yet reached stabilization. We generally consider a building to be stabilized on the earlier to occur of the first anniversary of a building’s shell completion or a building achieving 90% occupancy. |
Of our total portfolio, we owned and managed 67 buildings totaling approximately 17.5 million square feet through our minority ownership interests in our joint venture partnerships (as described in “Note 5 of the Condensed Consolidated Financial Statements”).
Through September 30, 2020, we had directly acquired 57 buildings comprised of approximately 11.9 million square feet for an aggregate total purchase price of approximately $1.2 billion, as well as the minority ownership interests in the two joint venture partnerships, as described above. Also, through our minority ownership interests in our joint venture partnerships, we completed the development of three industrial buildings comprising an aggregate of 1.0 million square feet and total costs to complete the development of approximately $91.7 million during the period from July 16, 2020 through September 30, 2020. We funded these acquisitions and development activity primarily with proceeds from our public offering, institutional equity and debt financings.
We have used, and intend to continue to use, the net proceeds from our offerings primarily to make investments in real estate assets. We may use the net proceeds from our offerings to make other real estate-related investments and debt investments and to pay distributions. The number and type of properties we may acquire and debt and other investments we may make will depend upon real estate market conditions, the amount of proceeds we raise in our offerings, and other circumstances existing at the time we make our investments.
Our primary investment objectives include the following:
● | preserving and protecting our stockholders’ capital contributions; |
● | providing current income to our stockholders in the form of regular cash distributions; and |
● | realizing capital appreciation upon the potential sale of our assets or other liquidity events. |
There is no assurance that we will attain our investment objectives. Our charter places numerous limitations on us with respect to the manner in which we may invest our funds. In most cases these limitations cannot be changed unless our charter is amended, which may require the approval of our stockholders.
We may acquire assets free and clear of mortgage or other indebtedness by paying the entire purchase price in cash or equity securities, or a combination thereof, and we may selectively encumber all or only certain assets with debt. The proceeds from our borrowings may be used to fund investments, make capital expenditures, pay distributions, and for general corporate purposes.
We expect to manage our corporate financing strategy under the current mortgage lending and corporate financing environment by considering various lending sources, which may include long-term fixed-rate mortgage loans, unsecured or secured lines of credit or term loans, private placement or public bond issuances, and the assumption of existing loans in connection with certain property acquisitions, or any combination of the foregoing.
Net Asset Value
Our board of directors, including a majority of our independent directors, has adopted valuation procedures, as amended from time to time, that contain a comprehensive set of methodologies to be used in connection with the calculation of our NAV. With the approval of our board of directors, including a majority of our independent directors, we have engaged Altus Group U.S., Inc., a third-party valuation firm, to serve as our independent valuation advisor (“Altus Group” or the “Independent Valuation Advisor”) with respect to providing monthly real property appraisals, reviewing annual third-party real property appraisals, reviewing the internal valuations of debt-related assets and liabilities performed by our Advisor, helping us administer the valuation process for the real properties in our portfolio, and assisting in the development and review of our valuation procedures. As part of this process, our Advisor reviews the estimates of the values of our real property portfolio, real estate-related assets, and other assets and liabilities within our portfolio for consistency with our valuation guidelines and the overall reasonableness of the valuation conclusions, and informs our board of directors of its conclusions. Although the Independent Valuation Advisor or other pricing sources may consider any comments received from us or our Advisor or other valuation sources for their individual valuations, the final estimated fair values of our real property assets are determined by the Independent Valuation Advisor and real estate-related assets and other assets and liabilities are determined by the applicable pricing source. With respect to the valuation of our real property assets, the Independent Valuation Advisor provides our board of directors with periodic valuation reports and is available to meet with our board of directors to review valuation information, as well as our valuation guidelines and the operation and results of the valuation process generally. Unconsolidated real property assets held through joint ventures or partnerships are valued according to the valuation procedures set by such joint ventures or partnerships. At least once per year, each unconsolidated real property asset will be appraised by a third-party
26
appraiser. If the valuation procedures of the applicable joint ventures or partnerships do not accommodate a monthly determination of the fair value of real property assets, we will determine the estimated fair value of the unconsolidated real property assets for those interim periods. All parties engaged by us in connection with the calculation of our NAV, including Altus Group, ALPS Fund Services Inc. (“ALPS”) and our Advisor, are subject to the oversight of our board of directors. Our board of directors has the right to engage additional valuation firms and pricing sources to review the valuation process or valuations, if deemed appropriate. At least once each calendar year our board of directors, including a majority of our independent directors, reviews the appropriateness of our valuation procedures with input from the Independent Valuation Advisor. From time to time our board of directors, including a majority of our independent directors, may adopt changes to the valuation procedures if it: (1) determines that such changes are likely to result in a more accurate reflection of NAV or a more efficient or less costly procedure for the determination of NAV without having a material adverse effect on the accuracy of such determination; or (2) otherwise reasonably believes a change is appropriate for the determination of NAV. We will publicly announce material changes to our valuation procedures or the identity or role of the Independent Valuation Advisor or ALPS. See Exhibit 99.2 of this Quarterly Report on Form 10-Q for a more detailed description of our valuation procedures, including important disclosures regarding real property valuations provided by the Independent Valuation Advisor.
Our valuation procedures, which address specifically each category of our assets and liabilities and are applied separately to the preparation of our financial statements in accordance with GAAP, involve adjustments from historical cost. There are certain factors which cause NAV to be different from net book value on a GAAP basis. Most significantly, the valuation of our real estate assets, which is the largest component of our NAV calculation, is provided to us by the Independent Valuation Advisor on a monthly basis. For GAAP purposes, these assets are generally recorded at depreciated or amortized cost. Other examples that will cause our NAV to differ from our GAAP net book value include the straight-lining of rent, which results in a receivable for GAAP purposes that is not included in the determination of our NAV. Third party appraisers may value our individual real estate assets using appraisal standards that deviate from fair value standards under GAAP. The use of such appraisal standards may cause our NAV to deviate from GAAP fair value principles. We did not develop our valuation procedures with the intention of complying with fair value concepts under GAAP and, therefore, there could be differences between our fair values and the fair values derived from the principal market or most advantageous market concepts of establishing fair value under GAAP.
As used below, “Fund Interests” means our outstanding shares of common stock, along with the partnership units in our Operating Partnership (“OP Units”), which may be held directly or indirectly by the Advisor, the Sponsor and third parties, and “Aggregate Fund NAV” means the NAV of all of the Fund Interests.
The following table sets forth the components of Aggregate Fund NAV as of September 30, 2020 and December 31, 2019:
The following table sets forth the NAV per Fund Interest as of September 30, 2020:
Under GAAP, we record liabilities for ongoing distribution fees that (i) we currently owe under the terms of the dealer manager agreement and (ii) we estimate we may pay to the Dealer Manager in future periods for shares of our common stock. As of September 30, 2020, we estimated approximately $43.6 million of ongoing distribution fees were potentially payable to the Dealer Manager. We do not deduct the liability for estimated future distribution fees in our calculation of NAV since we intend for our NAV to reflect our estimated value on the date that we determine our NAV. Accordingly, our estimated NAV at any given time does not include consideration of any estimated future distribution fees that may become payable after such date.
27
The valuations of our real property as of September 30, 2020 were provided by the Independent Valuation Advisor in accordance with our valuation procedures. Certain key assumptions that were used by the Independent Valuation Advisor in the discounted cash flow analysis are set forth in the following table:
|
|
|
|
|
|
Weighted-Average Basis |
|
Exit capitalization rate |
|
5.4 |
% |
Discount rate / internal rate of return |
|
6.4 |
% |
Average holding period (years) |
|
10.0 |
|
A change in the exit capitalization and discount rates used would impact the calculation of the value of our real properties. For example, assuming all other factors remain constant, the changes listed below would result in the following effects on the value of our real properties:
From November 1, 2017 through January 31, 2020, we valued our debt-related investments and real estate-related liabilities generally in accordance with fair value standards under GAAP. Beginning with our valuation for February 29, 2020, our property-level mortgages and corporate-level credit facilities that are intended to be held to maturity (which for fixed rate debt not subject to interest rate hedges may be the date near maturity at which time the debt will be eligible for prepayment at par for purposes herein), including those subject to interest rate hedges, were valued at par (i.e. at their respective outstanding balances). In addition, because we utilize interest rate hedges to stabilize interest payments (i.e. to fix all-in interest rates through interest rate swaps or to limit interest rate exposure through interest rate caps) on individual loans, each loan and associated interest rate hedge is treated as one financial instrument which is valued at par if intended to be held to maturity. This policy of valuing at par applies regardless of whether any given interest rate hedge is considered as an asset or liability for GAAP purposes. We currently estimate the fair value of our debt (inclusive of associated interest rate hedges) that was intended to be held to maturity as of September 30, 2020 was $9.6 million higher than par for such debt in aggregate, meaning that if we used the fair value of our debt rather than par (and treated the associated hedge as part of the same financial instrument), our NAV would be lower by approximately $9.6 million, or $0.07 per share, as of September 30, 2020. As of September 30, 2020, we classified all of our debt as intended to be held to maturity. See “Performance” below for further information concerning the impact of interest rate movements on our share returns assuming we continue to include the mark-to-market adjustments for all borrowing-related interest rate hedge and debt instruments.
Our NAV increased from $10.0763 per share as of December 31, 2019 to $10.0904 per share as of September 30, 2020. The increase in NAV was primarily driven by the performance of our real estate portfolio, including the acquisition of eight operating properties acquired during the nine months ended September 30, 2020, for an aggregate purchase price of over $277.0 million, exclusive of due diligence expenses and other closing costs, as well as the acquisition of minority ownership interests in two joint venture partnerships for an aggregate purchase price of $301.0 million, partially offset by the repayment of organization and offering costs that were previously funded on behalf of the Company by the Advisor.
28
As noted above, effective February 29, 2020, our board of directors approved amendments to our valuation procedures which revised the way we value property-level mortgages, corporate-level credit facilities and associated interest rate hedges when loans, including associated interest rate hedges, are intended to be held to maturity, effectively eliminating all mark-to-market adjustments for such loans and hedges from the calculation of our NAV. The following table summarizes the impact of interest rate movements on our Class I share return assuming we continued to include the mark-to-market adjustments for all borrowing-related interest rate hedge and debt instruments beginning with the February 29, 2020 NAV:
(2) | The inception date for Class I shares and Class T shares was November 1, 2017, which is when shares of our common stock were first issued to third-party investors in our initial public offering. The inception date for Class W shares was July 2, 2018, which is when Class W shares of common stock were first issued to third-party investors. |
(3) | The Total Returns presented are based on the actual NAVs at which stockholders transacted, calculated pursuant to our valuation procedures. With respect to the “Class T Share Total Return (with Sales Charge),” the Total Returns are calculated assuming the stockholder also paid the maximum upfront selling commission, dealer manager fee and ongoing distribution fees in effect during the time period indicated. With respect to “Class T Share Total Return (without Sales Charge),” the Total Returns are calculated assuming the stockholder did not pay any upfront selling commission or dealer manager fee, but did pay the maximum ongoing distribution fees in effect during the time period indicated. From NAV inception to January 31, 2020, these NAVs reflected mark-to-market adjustments on our borrowing-related debt instruments and our borrowing-related interest rate hedge positions. |
(4) | The Adjusted Total Returns presented are based on adjusted NAVs calculated as if we had continued to mark our borrowing-related hedge and debt instruments to market following a policy change to largely exclude borrowing-related interest rate hedge and debt marks to market from our NAV calculations (except in certain circumstances pursuant to our valuation procedures), beginning with our NAV calculated as of February 29, 2020. Therefore, the NAVs used in the calculation of Adjusted Total Returns were calculated in the same manner as the NAVs used in the calculation of the unadjusted total return for periods through |
29
January 31, 2020. The Adjusted Total Returns include the incremental impact of the adjusted NAVs on advisory fees and performance fees; however, they do not include the incremental impact that the adjusted NAVs would have had on any expense support from our Advisor, or the prices at which shares were purchased in our public offering or pursuant to our share redemption program. For calculation purposes, transactions in our common stock were assumed to occur at the adjusted NAVs. |
Impacts of COVID-19
The global pandemic and resulting shut down of large parts of the U.S. economy has created significant uncertainty and enhanced investment risk across many asset classes, including real estate. The extent of the impact on the commercial real estate sector continues to vary dramatically across real estate property types and markets, with certain property segments affected particularly harshly. While not immune to the effects of COVID-19, the industrial property sector continues to remain relatively resilient and we believe we are well-positioned to navigate this unprecedented period. From December 31, 2019 through November 4, 2020, we raised over $924.6 million in equity capital. We believe that the increased pace at which we raised capital in early 2020 was primarily due to an influx of capital from IPT shareholders who determined to invest in our common shares following the completion of IPT’s asset sale in January 2020. We have continued to see steady capital inflows from new investors who invested $304.5 million of new capital into the Company during the second and third quarters. As a result, our balance sheet as of September 30, 2020 was strong with $1.7 billion in assets, over $150.0 million of cash, and 26% leverage, calculated as our total borrowings outstanding divided by the fair value of our real property plus our investment in unconsolidated joint venture partnerships and cash and cash equivalents. See “—Liquidity and Capital Resources—Capital Resources and Uses of Liquidity—Offering Proceeds” for further information concerning capital raised thus far in 2020 and our expectations regarding the pace of capital raising in the near term. As of September 30, 2020, we owned and managed, either directly or through our minority ownership interests in our joint venture partnerships, a total real estate portfolio comprised of 124 industrial buildings totaling 29.4 million square feet, with 191 customers, spanning a multitude of industries and sectors across 23 markets, with a strategic weighting towards top tier markets where we have historically seen the lowest volatility combined with positive returns over time. Our total portfolio was 81.1% occupied (86.3% leased) as of September 30, 2020, with a weighted-average remaining lease term (based on square feet) of 4.8 years, and our operating portfolio was 90.8% occupied (94.3% leased). During the three months ended September 30, 2020, we leased approximately 1.2 million square feet, which included 1.0 million square feet of new and future leases and 0.2 million square feet of renewals, through 15 separate transactions with an average annual base rent of $5.53 per square foot. Future leases represent new leases for units that are entered into while the units are occupied by the current customer.
Our asset management teams are working directly with our customers to manage through these turbulent times. Many of our customers’ businesses have been disrupted and some of our more impacted customers are experiencing lost revenue. Our teams are working with these customers to ensure they take advantage of any available insurance and government stimulus programs, which may help them pay rent whether in full or in part. Where appropriate, we have restructured leases and may restructure additional leases to provide temporary rent relief needed by certain customers while positioning ourselves to recapture abated rent over time. Within our total portfolio, after adjusting for customers with such forbearance agreements in place, we received or agreed to defer 98% of our rent originally payable for the third quarter of 2020, compared to average annual collections of over 99% prior to the pandemic. We have executed or agreed to such forbearance agreements with approximately 1% of our customers (based on third quarter gross rent). Within our total portfolio, and without adjusting for the effects of such forbearance agreements, we received 97% of our contractual rent for the third quarter of 2020, and 97% of our contractual rent for October as of November 4, 2020. Rent relief requests have decreased in the three months ended September 30, 2020 and did not have a material impact on our results of operations for the nine months ended September 30, 2020. We can provide no assurances that we will be able to continue to collect rent at the same level that we did prior to the pandemic. Furthermore, we can provide no assurances that we will be able to recover unpaid rent.
While the uncertain length and depth of the damage from business disruptions remain a significant risk, we believe our NAV as of September 30, 2020 currently reflects this uncertainty. During the third quarter of 2020, we experienced a reduction of deployment due to increased demand for industrial properties, as well as the effects of COVID-19. Going forward, the market disruption may continue to slow our pace of deployment further as sellers may be less willing to transact. Slower deployment of capital into income producing real estate further reduces near-term cash flow generated to cover our distributions to our stockholders and may cause us to reduce our NAV in future periods in the absence of asset appreciation or expense support from the Advisor. However, we believe our strong balance sheet and ability as an operator will allow us to be a patient buyer of assets in order to maximize long-term total return.
30
RESULTS OF OPERATIONS
Summary of 2020 Activities
During the nine months ended September 30, 2020, we completed the following activities:
● | Our NAV was $10.0904 per share as of September 30, 2020 as compared to $10.0763 per share as of December 31, 2019. |
● | We raised $832.7 million of gross equity capital from our public offerings during the nine months ended September 30, 2020. |
● | We acquired 12 industrial buildings comprised of 3.4 million square feet for an aggregate purchase price of approximately $329.0 million, which is equal to the total consideration paid. We funded these acquisitions with proceeds from our public offerings and debt financings. |
● | We closed a transaction to acquire interests in two joint venture partnerships, the BTC I Partnership and the BTC II Partnership, with third party investors for a purchase price of $301.0 million in cash paid at closing, exclusive of due diligence expenses and other closing costs. |
● | For the period from July 16, 2020 through September 30, 2020, we, through our 20.0% ownership interest in the BTC I Partnership, completed the development of one industrial building comprising 0.3 million square feet for aggregate total costs to complete the development of approximately $30.9 million. |
● | For the period from July 16, 2020 through September 30, 2020, we, through our 8.0% ownership interest in the BTC II Partnership, completed the development of two industrial buildings comprising 0.7 million square feet for aggregate total costs to complete the development of approximately $60.8 million. |
● | As of September 30, 2020, our joint venture partnerships had nine buildings under construction totaling approximately 2.7 million square feet and six buildings in the pre-construction phase for an additional 1.7 million square feet. |
● | We entered into interest rate swaps with an aggregate notional amount of $150.0 million during the first quarter of 2020 to hedge LIBOR on our term loan, including one that became effective during the second quarter. These interest rate swaps, in combination with those already in place, effectively fix LIBOR at a weighted-average of 1.14% and result in an all-in interest rate on our term loan ranging from 1.84% to 2.60% depending on our consolidated leverage ratio. |
Portfolio Information
Our total owned and managed portfolio was as follows:
|
|
|
|
|
|
|
|
|
|
As of |
|
||||
(square feet in thousands) |
|
September 30, 2020 |
|
December 31, 2019 |
|
September 30, 2019 |
|
Portfolio data: |
|
|
|
|
|
|
|
Consolidated buildings (1) |
|
57 |
|
45 |
|
42 |
|
Unconsolidated buildings (1) |
|
67 |
|
— |
|
— |
|
Total buildings |
|
124 |
|
45 |
|
42 |
|
Rentable square feet of consolidated buildings (1) |
|
11,884 |
|
8,486 |
|
7,642 |
|
Rentable square feet of unconsolidated buildings (1) |
|
17,530 |
|
— |
|
— |
|
Total rentable square feet |
|
29,414 |
|
8,486 |
|
7,642 |
|
Total number of customers (2) |
|
191 |
|
103 |
|
96 |
|
Percent occupied of operating portfolio (2)(3) |
|
90.8 |
% |
98.7 |
% |
97.2 |
% |
Percent occupied of total portfolio (2)(3) |
|
81.1 |
% |
98.7 |
% |
97.2 |
% |
Percent leased of operating portfolio (2)(3) |
|
94.3 |
% |
100.0 |
% |
97.9 |
% |
Percent leased of total portfolio (2)(3) |
|
86.3 |
% |
100.0 |
% |
97.9 |
% |
(1) | Represents acquired or completed buildings. |
(2) | Represents our total portfolio of owned and managed properties, including our consolidated and unconsolidated properties. Unconsolidated properties are those owned through our minority ownership interests in our joint venture partnerships. Properties owned through our joint venture partnerships are shown as if we owned a 100% interest. See “Note 5 to the Condensed Consolidated Financial Statements” for more details on our joint venture partnerships. |
(3) | See “Overview—General” above for a description of our operating portfolio and our total portfolio (which includes our operating and value-add portfolios) and for a description of the occupied and leased rates. |
31
Results for the Three and Nine Months Ended September 30, 2020 Compared to the Same Periods in 2019
The following table summarizes the changes in our results of operations for the three and nine months ended September 30, 2020 as compared to the same periods in 2019. We evaluate the performance of consolidated operating properties we own and manage using a same store analysis because the population of properties in this analysis is consistent from period to period, thereby eliminating the effects of any material changes in the composition of the aggregate portfolio on performance measures. We have defined the same store portfolio to include consolidated operating properties owned for the entirety of both the current and prior reporting periods for which the operations had been stabilized. “Other properties” includes buildings not meeting the same store criteria. The same store operating portfolio for the three month periods presented below included 34 buildings totaling approximately 5.7 million square feet owned as of July 1, 2019, which represented 47.8% of total rentable square feet, 54.0% of total revenues, and 53.0% of net operating income for the three months ended September 30, 2020. The same store operating portfolio for the nine month periods presented below included 13 buildings totaling approximately 2.7 million square feet owned as of January 1, 2019, which represented 23.0% of total rentable square feet, 29.0% of total revenues, and 29.3% of net operating income for the nine months ended September 30, 2020.
32
Rental Revenues. Rental revenues are comprised of rental income, straight-line rent, and amortization of above- and below-market lease assets and liabilities. Total rental revenues increased by approximately $8.8 million and $30.9 million for the three and nine months ended September 30, 2020, respectively, as compared to the same periods in 2019, primarily due to an increase in non-same store revenues, which was attributable to the significant growth in our portfolio. For the three and nine months ended September 30, 2020, non-same store rental revenues reflect the addition of 44 and 23 buildings we have acquired since January 1, 2019 and July 1, 2019, respectively. Same store rental revenues remained consistent for the three months ended September 30, 2020. For the nine months ended September 30, 2020, same store rental revenues increased $0.4 million, or 2.2%, as compared to the same period in 2019, primarily due to an increase in recoverable expenses that resulted in increases to recovery revenue.
Rental Expenses. Rental expenses include certain property operating expenses typically reimbursed by our customers, such as real estate taxes, property insurance, repair and maintenance, and utilities. Total rental expenses increased by approximately $1.9 million and $7.3 million for the three and nine months ended September 30, 2020, respectively, as compared to the same periods in 2019, primarily due to an increase in non-same store rental expenses attributable to the significant growth in our portfolio since January 1, 2019 and July 1, 2019. Same store rental expenses decreased by $0.1 million, or 3.1%, for the three months ended September 30, 2020, as compared to the same period in 2019, primarily due to a credit related to a 2019 tax appeal related to one of our properties, that was settled in the third quarter of 2020, partially offset by an increase in property taxes for certain of our assets. Same store rental expenses increased $0.1 million, or 2.5%, for the nine months ended September 30, 2020, as compared to the same period in 2019, primarily due to an increase in property taxes for certain of our assets, partially offset by a decrease in repairs and maintenance, including lower snow removal and landscaping costs.
Other Expenses. Other expenses, in aggregate, increased by approximately $16.2 million for the three months ended September 30, 2020, as compared to the same period in 2019, primarily due to the following:
● | an increase in real estate-related depreciation and amortization expense, advisory fees and general and administrative expenses totaling an aggregate amount of $10.1 million for the three months ended September 30, 2020, as a result of the growth in our portfolio as compared to the same period in 2019; and |
● | a net decrease in the expense support from the Advisor of $5.1 million for the three months ended September 30, 2020, due to the $4.4 million of net reimbursement to the Advisor of deferred fees and other expenses that were previously supported pursuant to the expense support agreement between us and the Advisor, as compared to the $0.7 million of net expense support received for the three months ended September 30, 2019. |
Other expenses, in aggregate, increased by approximately $27.2 million for the nine months ended September 30, 2020, as compared to the same period in 2019, primarily due to the following:
● | an increase in real estate-related depreciation and amortization expense, advisory fees and general and administrative expenses totaling an aggregate amount of $28.6 million for the nine months ended September 30, 2020 as a result of the growth in our portfolio as compared to the same period in 2019; and |
● | an increase in interest expense of $3.6 million for the nine months ended September 30, 2020 primarily related to: (i) an increase in the interest expense from the two mortgage notes assumed in connection with the acquisition of the Dallas Infill Industrial Portfolio in June 2019 of $0.9 million, as compared to the same period in 2019 and (ii) an increase in the interest expense of $2.7 million from borrowings under the term loan due to an increase in average net borrowings of $259.0 million, as compared to the same period in 2019; partially offset by a decrease in interest from borrowings under the line of credit due to lower average net borrowings of $40.1 million for the nine months ended September 30, 2020, as compared to the same period in 2019. |
Partially offset by:
● | a net increase in expense support from the Advisor of $6.4 million for the nine months ended September 30, 2020, due to the $5.9 million of net expense support received for the nine months ended September 30, 2020, as compared to the $0.5 million of net reimbursement to the Advisor of deferred fees and other expenses that were previously supported pursuant to the expense support agreement between us and the Advisor for the nine months ended September 30, 2019. |
33
ADDITIONAL MEASURES OF PERFORMANCE
Net Loss and Net Operating Income (“NOI”)
We define NOI as GAAP rental revenues less GAAP rental expenses. We consider NOI to be an appropriate supplemental performance measure and believe NOI provides useful information to our investors regarding our results of operations because NOI reflects the operating performance of our properties and excludes certain items that are not considered to be controllable in connection with the management of the properties, such as real estate-related depreciation and amortization, acquisition-related expenses, impairment charges, general and administrative expenses and interest expense. However, NOI should not be viewed as an alternative measure of our financial performance since it excludes such expenses, which expenses could materially impact our results of operations. Further, our NOI may not be comparable to that of other real estate companies as they may use different methodologies for calculating NOI. Therefore, we believe our net income (loss), as defined by GAAP, to be the most appropriate measure to evaluate our overall performance. Refer to “Results of Operations” above for a reconciliation of our GAAP net income (loss) to NOI for the three and nine months ended September 30, 2020 and 2019.
Funds from Operations (“FFO”), Company-defined Funds from Operations (“Company-defined FFO”) and Modified Funds from Operations (“MFFO”)
We believe that FFO, Company-defined FFO, and MFFO, in addition to net income (loss) and cash flows from operating activities as defined by GAAP, are useful supplemental performance measures that our management uses to evaluate our consolidated operating performance. However, these supplemental, non-GAAP measures should not be considered as an alternative to net income (loss) or to cash flows from operating activities as an indication of our performance and are not intended to be used as a liquidity measure indicative of cash flow available to fund our cash needs, including our ability to make distributions to our stockholders. No single measure can provide users of financial information with sufficient information and only our disclosures read as a whole can be relied upon to adequately portray our financial position, liquidity, and results of operations. Fees deferred or waived by the Advisor and payments received from the Advisor and/or reimbursed to the Advisor pursuant to the expense support agreement are included in determining our net income (loss), which is used to determine FFO, Company-defined FFO, and MFFO. If we had not received support from the Advisor and/or reimbursed the Advisor pursuant to the expense support agreement, our FFO, Company-defined FFO, and MFFO would have been lower or higher. In addition, other REITs may define FFO and similar measures differently and choose to treat acquisition-related costs and potentially other accounting line items in a manner different from us due to specific differences in investment and operating strategy or for other reasons.
FFO. As defined by the National Association of Real Estate Investment Trusts (“NAREIT”), FFO is a non-GAAP measure that excludes certain items such as real estate-related depreciation and amortization. We believe FFO is a meaningful supplemental measure of our operating performance that is useful to investors because depreciation and amortization in accordance with GAAP implicitly assumes that the value of real estate assets diminishes predictably over time. We use FFO as an indication of our consolidated operating performance and as a guide to making decisions about future investments.
Company-defined FFO. Similar to FFO, Company-defined FFO is a non-GAAP measure that excludes real estate-related depreciation and amortization and also excludes acquisition-related costs, which are characterized as expenses in determining net income (loss) under GAAP. The purchase of operating properties has been a key strategic objective of our business plan focused on generating growth in operating income and cash flow in order to make distributions to investors. However, the corresponding acquisition-related costs are driven by transactional activity rather than factors specific to the on-going operating performance of our properties or investments. Company-defined FFO may not be a complete indicator of our operating performance, and may not be a useful measure of the long-term operating performance of our properties if we do not continue to operate our business plan as disclosed.
MFFO. As defined by the Institute for Portfolio Alternatives (“IPA”), MFFO is a non-GAAP supplemental financial performance measure used to evaluate our operating performance. Similar to FFO, MFFO excludes items such as real estate-related depreciation and amortization. Similar to Company-defined FFO, MFFO excludes acquisition-related costs. MFFO also excludes straight-line rent and amortization of above- and below-market leases. In addition, there are certain other MFFO adjustments as defined by the IPA that are not applicable to us and are not included in our presentation of MFFO.
We are in the acquisition phase of our life cycle. Management does not include historical acquisition-related costs in its evaluation of future operating performance, as such costs are not expected to be incurred once our acquisition phase is complete. We use FFO, Company-defined FFO and MFFO to, among other things: (i) evaluate and compare the potential performance of the portfolio after the acquisition phase is complete, and (ii) evaluate potential performance to determine liquidity event strategies. Although some REITs may present similar measures differently from us, we believe FFO, Company-defined FFO and MFFO generally facilitate a
34
comparison to other REITs that have similar operating characteristics to us. We believe investors are best served if the information that is made available to them allows them to align their analyses and evaluation with the same performance metrics used by management in planning and executing our business strategy. We believe that these performance metrics will assist investors in evaluating the potential performance of the portfolio after the completion of the acquisition phase. However, these supplemental, non-GAAP measures are not necessarily indicative of future performance and should not be considered as an alternative to net loss or to cash flows from operating activities and is not intended to be used as a liquidity measure indicative of cash flow available to fund our cash needs. Neither the SEC, NAREIT, nor any regulatory body has passed judgment on the acceptability of the adjustments used to calculate FFO, Company-defined FFO and MFFO. In the future, the SEC, NAREIT, or a regulatory body may decide to standardize the allowable adjustments across the non-traded REIT industry at which point we may adjust our calculation and characterization of FFO, Company-defined FFO and MFFO.
The following unaudited table presents a reconciliation of GAAP net income (loss) to NAREIT FFO, Company-defined FFO and MFFO:
We believe that: (i) our NAREIT FFO of $1.5 million, or $0.01 per share, as compared to the total gross distributions declared (which are paid in cash or reinvested in shares offered through our distribution reinvestment plan) in the amount of $17.0 million, or $0.14 per
35
share, for the three months ended September 30, 2020; (ii) our NAREIT FFO of $20.6 million, or $0.20 per share, as compared to the total gross distributions declared (which are paid in cash or reinvested in shares offered through our distribution reinvestment plan) in the amount of $42.9 million, or $0.41 per share, for the nine months ended September 30, 2020; and (iii) our NAREIT FFO of $19.8 million, or $0.92 per share, as compared to the total gross distributions declared (which are paid in cash or reinvested in shares offered through our distribution reinvestment plan) of $68.4 million, or $2.16 per share, for the period from inception (August 12, 2014) to September 30, 2020, are not indicative of future performance as we are in the acquisition phase of our life cycle and still receive expense support from the Advisor. See “Liquidity and Capital Resources—Distributions” below for details concerning our distributions, which are paid in cash or reinvested in shares of our common stock by participants in our distribution reinvestment plan.
LIQUIDITY AND CAPITAL RESOURCES
Liquidity
Our primary sources of capital for meeting our cash requirements during our acquisition phase are, and will be, net proceeds from our public offerings, including proceeds from the sale of shares offered through our distribution reinvestment plan, debt financings, cash resulting from the expense support provided by the Advisor and cash generated from operating activities. We currently intend to maintain an allocation of 10% of our NAV to cash-related liquidity. Our principal uses of funds are, and will be, for the acquisition of properties and other investments, capital expenditures, operating expenses, payments under our debt obligations, and distributions to our stockholders. Over time, we intend to fund a majority of our cash needs for items other than asset acquisitions, including the repayment of debt and capital expenditures, from operating cash flows and refinancings. There may be a delay between the deployment of proceeds raised from our public offerings and our purchase of assets, which could result in a delay in the benefits to our stockholders, if any, of returns generated from our investments.
The global pandemic and resulting shut down of large parts of the U.S. economy has created significant uncertainty and enhanced investment risk across many asset classes, including real estate. The COVID-19 pandemic could have a material adverse effect on our financial condition, results of operations and cash flows as the reduced economic activity severely impacts certain of our customers’ businesses, financial condition and liquidity and may cause certain customers to be unable to meet their obligations to us in full. However, since December 31, 2019 and through November 4, 2020, we have raised over $924.6 million in equity capital. We believe that the increased pace at which we raised capital in early 2020 was primarily due to an influx of capital from IPT shareholders who determined to invest in our common shares following the completion of IPT’s asset sale in January 2020. As a result, we ended the third quarter with $1.7 billion in assets and 26% leverage, calculated as our total borrowings outstanding divided by the fair value of our real property plus our investment in unconsolidated joint venture partnerships and cash and cash equivalents. We have continued to see steady capital inflows from new investors who invested $304.5 million of new capital into the Company during the second and third quarters. See “—Capital Resources and Uses of Liquidity—Offering Proceeds” for further information concerning capital raised thus far in 2020 and our expectations regarding the pace of capital raising in the near term. As of September 30, 2020, we owned and managed, either directly or through our minority ownership interests in our joint venture partnerships, a total real estate portfolio comprised of 124 industrial buildings totaling 29.4 million square feet, with a diverse roster of 191 customers, large and small, spanning a multitude of industries and sectors across 23 markets, with a strategic weighting towards top tier markets where we have historically seen the lowest volatility combined with positive returns over time. Our total portfolio was 81.1% occupied (86.3% leased) as of September 30, 2020, with a weighted-average remaining lease term (based on square feet) of 4.8 years. Within our total portfolio, after adjusting for customers with forbearance agreements in place, we received or agreed to defer 98% of our rent originally payable for the third quarter of 2020, compared to average annual collections of over 99% prior to the pandemic. We have executed or agreed to such forbearance agreements with approximately 1% of our customers (based on third quarter gross rent).Within our total portfolio, and without adjusting for the effects of forbearance agreements, we received 97% of our contractual rent for the third quarter of 2020, and 97% of our contractual rent for October as of November 4, 2020.
The Advisor, subject to the oversight of our board of directors and, under certain circumstances, the investment committee or other committees established by our board of directors, will continue to evaluate potential acquisitions and will engage in negotiations with sellers and lenders on our behalf. Pending investment in property, debt, other investments, and our 10% cash allocation mentioned above, we may decide to temporarily invest any unused proceeds from our public offering in certain investments that are expected to yield lower returns than those earned on real estate assets. During these times of economic uncertainty, we have seen a slow down in transaction volume, which has adversely impacted our ability to acquire real estate assets, which would cause us to retain more lower yielding investments and hold them for longer periods of time while we seek to acquire additional real estate assets. These lower returns may affect our ability to make distributions to our stockholders. Potential future sources of capital include proceeds from secured or unsecured financings from banks or other lenders, proceeds from the sale of assets, and undistributed funds from operations.
We believe that our cash on-hand, anticipated net offering proceeds, anticipated financing activities and cash resulting from the
36
expense support provided by the Advisor will be sufficient to meet our liquidity needs for the foreseeable future.
Cash Flows. The following table summarizes our cash flows, as determined on a GAAP basis, for the following periods:
Cash provided by operating activities during the nine months ended September 30, 2020 increased by approximately $10.4 million as compared to the same period in 2019, primarily due to the growth in our property operations. Cash used in investing activities during the nine months ended September 30, 2020 increased by approximately $204.5 million as compared to the same period in 2019 primarily due to our acquisition of minority ownership interests in two joint venture partnerships for an aggregate purchase price of $301.0 million, exclusive of due diligence expenses and other closing costs, and an increase in capital expenditures of $3.6 million, partially offset by a decrease in acquisition volume of directly owned properties, as compared to the same period in 2019. Cash provided by financing activities during the nine months ended September 30, 2020 increased approximately $293.3 million as compared to the same period in 2019 primarily due to an increase in net proceeds raised in our public offerings of $528.5 million, driven in part by the influx of capital following the completion of IPT’s asset sale in January 2020, partially offset by a decrease of $224.6 million in our net borrowing activity.
Capital Resources and Uses of Liquidity
In addition to our cash and cash equivalents balance available, our capital resources and uses of liquidity are as follows:
Line of Credit and Term Loan. As of September 30, 2020, we had an aggregate of $730.0 million of commitments under our credit agreement, including $315.0 million under our line of credit and $415.0 million under our term loan. As of that date, we had no amounts outstanding under our line of credit and $415.0 million outstanding under our term loan with an effective interest rate of 2.24%, which includes the effect of the interest rate swap agreements. The unused and available portions under our line of credit were both $314.9 million as of September 30, 2020. There were no unused nor available amounts under our term loan as of September 30, 2020. Our $315.0 million line of credit matures in November 2023 and may be extended pursuant to a one-year extension option, subject to continuing compliance with certain financial covenants and other customary conditions. Our $415.0 million term loan matures in February 2024. Our line of credit and term loan borrowings are available for general corporate purposes including, but not limited to, the acquisition and operation of permitted investments by us. Refer to “Note 6 to the Condensed Consolidated Financial Statements” for additional information regarding our line of credit and term loan.
In July 2017, the Financial Conduct Authority (“FCA”) that regulates LIBOR announced it intends to stop compelling banks to submit rates for the calculation of LIBOR after 2021. As a result, the Federal Reserve Board and the Federal Reserve Bank of New York organized the Alternative Reference Rates Committee (“ARRC”), which identified the Secured Overnight Financing Rate (“SOFR”) as its preferred alternative rate for LIBOR in derivatives and other financial contracts. We are not able to predict when LIBOR will cease to be available or when there will be sufficient liquidity in the SOFR markets. Any changes adopted by the FCA or other governing bodies in the method used for determining LIBOR may result in a sudden or prolonged increase or decrease in reported LIBOR. If that were to occur, our interest payment could change. In addition, uncertainty about the extent and manner of future changes may result in interest rate and/or payments that are higher or lower than if LIBOR were to remain available in the current form.
As of September 30, 2020, our line of credit and term loan are our only consolidated indebtedness with maturities beyond 2021 that have exposure to LIBOR. The agreement governing the term loan provides procedures for determining a replacement or alternative base rate in the event that LIBOR is discontinued. However, there can be no assurances as to whether such replacement or alternative base rate will be more or less favorable than LIBOR. As of September 30, 2020, we have interest rate swaps in place to hedge LIBOR on $350.0 million of commitments under our term loan. We intend to monitor the developments with respect to the potential phasing out of LIBOR after 2021 and work with our lenders to seek to ensure any transition away from LIBOR will have minimal impact on our financial condition, but can provide no assurances regarding the impact of the discontinuation of LIBOR.
Mortgage Notes. As of September 30, 2020, we had property-level borrowings of approximately $49.3 million of principal outstanding with a weighted-average remaining term of 4.6 years. These borrowings are secured by mortgages or deeds of trust and related assignments and security interests in the collateralized properties, and had a weighted-average interest rate of 3.71%. Refer to
37
“Note 6 to the Condensed Consolidated Financial Statements” for additional information regarding the mortgage notes.
Debt Covenants. Our line of credit, term loan and mortgage note agreements contain various property-level covenants, including customary affirmative and negative covenants. In addition, the agreement governing our line of credit and term loan contains certain corporate level financial covenants, including leverage ratio, fixed charge coverage ratio, and tangible net worth thresholds. These covenants may limit our ability to incur additional debt, to make borrowings under our line of credit, or to pay distributions. We were in compliance with all of our debt covenants as of September 30, 2020.
Offering Proceeds. As of September 30, 2020, aggregate gross proceeds raised since inception from our public and private offerings, including proceeds raised through our distribution reinvestment plan, were $1.35 billion ($1.27 billion net of direct selling costs). These proceeds include $528.2 million from the sale of 50.6 million shares of our common stock for the three months ended March 31, 2020. We believe that the increased pace at which we raised capital in early 2020 was primarily due to an influx of capital from IPT shareholders who determined to invest in our common shares following the receipt of a special distribution from IPT related to the completion of IPT’s asset sale in January 2020. Due to the unique nature of these circumstances, we do not expect that this increased pace will be sustained throughout 2020. We have continued to steadily raise capital, with $304.5 million of new capital inflows during the second and third quarters of 2020. In addition, due to the economic disruption created by the COVID-19 pandemic, we expect the pace of capital raising to be slower in the near term and to return to a pace more consistent with or slower than the pace we experienced during 2019.
Distributions. We intend to continue to accrue and make distributions on a regular basis. For the nine months ended September 30, 2020, approximately 2.1% of our total gross distributions were paid from cash flows from operating activities, as determined on a GAAP basis, and 97.9% of our total gross distributions were funded from sources other than cash flows from operating activities, as determined on a GAAP basis; specifically 29.0% of our total gross distributions were paid from cash provided by expense support from the Advisor, 19.1% were funded with proceeds from financing activities, and 49.8% of our total gross distributions were funded with proceeds from shares issued pursuant to our distribution reinvestment plan. Some or all of our future distributions may be paid from sources other than cash flows from operating activities, such as cash flows from financing activities, which include borrowings (including borrowings secured by our assets), proceeds from the issuance of shares pursuant to our distribution reinvestment plan, proceeds from sales of assets, cash resulting from a waiver or deferral of fees otherwise payable to the Advisor or its affiliates (including cash received pursuant to the expense support agreement), interest income from our cash balances, and the net proceeds from primary shares sold in our public offerings. We have not established a cap on the amount of our distributions that may be paid from any of these sources. The amount of any distributions will be determined by our board of directors, and will depend on, among other things, current and projected cash requirements, tax considerations and other factors deemed relevant by our board.
For the fourth quarter of 2020, our board of directors authorized monthly distributions to all common stockholders of record as of the close of business on the last business day of each month for the fourth quarter of 2020, or October 31, 2020, November 30, 2020 and December 31, 2020 (each a “Distribution Record Date”). The distributions were authorized at a quarterly rate of (i) $0.13625 per Class I share of common stock and (ii) $0.13625 per Class T share and per Class W share of common stock, less the respective annual distribution fees that are payable monthly with respect to such Class T shares and Class W shares. This quarterly rate is equal to a monthly rate of (i) $0.04542 per Class I share of common stock and (ii) $0.04542 per Class T share and per Class W share of common stock, less the respective annual distribution fees that are payable with respect to such Class T shares and Class W shares. Distributions for each month of the fourth quarter of 2020 have been or will be paid in cash or reinvested in shares of our common stock for those electing to participate in our distribution reinvestment plan following the close of business on the respective Distribution Record Date applicable to such monthly distributions.
There can be no assurances that the current distribution rate or amount per share will be maintained. In the near-term, we expect that we may need to continue to rely on expense support from the Advisor and sources other than cash flows from operations, as determined on a GAAP basis, to pay distributions, which if insufficient could negatively impact our ability to pay such distributions.
38
The following table outlines sources used, as determined on a GAAP basis, to pay total gross distributions (which are paid in cash or reinvested in shares of our common stock through our distribution reinvestment plan) for the quarters ended as of the dates indicated below:
(1) | For the nine months ended September 30, 2020 and the year ended December 31, 2019, the Advisor provided expense support of $13.5 million and $6.1 million, respectively. Expense support from the Advisor used to pay distributions is presented above without the effect of our reimbursements to the Advisor of previously deferred fees and other expenses. We reimbursed the Advisor $7.6 million and $13.6 million during the nine months ended September 30, 2020 and the year ended December 31, 2019, respectively. See “Note 10 to the Condensed Consolidated Financial Statements” for further detail on the expense support from and reimbursement to the Advisor during the quarter. Refer to Item 8, “Financial Statements and Supplementary Data” in our 2019 Form 10-K for a description of the expense support agreement. |
(2) | Stockholders may elect to have their distributions reinvested in shares of our common stock through our distribution reinvestment plan. |
(3) | Gross distributions are total distributions before the deduction of any distribution fees relating to Class T shares and Class W shares issued in the primary portion of our public offerings. |
For the nine months ended September 30, 2020, our cash flows provided by operating activities on a GAAP basis were $19.0 million, as compared to our aggregate total gross distributions declared (which are paid in cash or reinvested in shares issued pursuant to our distribution reinvestment plan) of $42.9 million. For the nine months ended September 30, 2019, our cash flows provided by operating activities on a GAAP basis were $8.6 million, as compared to our aggregate total gross distributions declared (which are paid in cash or reinvested in shares issued pursuant to our distribution reinvestment plan) of $13.9 million.
Refer to “Note 8 to the Condensed Consolidated Financial Statements” for further detail on our distributions.
Redemptions. For the nine months ended September 30, 2020, we received eligible redemption requests for approximately 0.3 million shares of our common stock, all of which we redeemed using cash flows from financing activities, for an aggregate amount of approximately $3.2 million, or an average price of $9.83 per share. For the nine months ended September 30, 2019, we received eligible redemption requests for 0.1 million shares of our common stock, all of which we redeemed using cash flows from financing activities, for an aggregate amount of approximately $1.4 million, or an average price of $9.87 per share. See Part II, Item 2. “Unregistered Sales of Equity Securities and Use of Proceeds—Share Redemption Program,” for a description of our share redemption program.
39
SUBSEQUENT EVENTS
Status of the Public Offerings
As of November 4, 2020, we had raised gross proceeds of $1.4 billion from the sale of 137.7 million shares of our common stock in our public offerings, including $37.0 million from the sale of 3.7 million shares of our common stock through our distribution reinvestment plan. These proceeds include $528.2 million from the sale of 50.6 million shares of our common stock for the three months ended March 31, 2020. We believe that the increased pace at which we raised capital in early 2020 was primarily due to an influx of capital from IPT shareholders who determined to invest in our common shares following their receipt of a special distribution from IPT related to the completion of IPT’s asset sale in January 2020. Due to the unique nature of these circumstances, we do not expect that this increased pace will be sustained throughout 2020. Although we have continued to steadily raise capital, with $304.5 million of new capital inflows during the second and third quarters, we have noted a slowdown in capital raising, which we attribute primarily to the COVID-19 pandemic. We expect sales of our common shares to return to a pace more consistent with the pace we experienced during 2019. As of November 4, 2020, approximately $1.0 billion in shares of our common stock remained available for sale pursuant to our follow-on public offering in any combination of Class T shares, Class W shares and Class I shares, including approximately $471.4 million in shares of common stock available for sale through our distribution reinvestment plan, which may be reallocated for sale in our primary offering.
Completed Acquisitions
On October 9, 2020, we acquired two industrial buildings located in the Cincinnati market. The total purchase price was approximately $30.2 million, exclusive of transfer taxes, due diligence expenses, acquisition costs and other closing costs.
Acquisitions Under Contract
We have entered into contracts to acquire properties with an aggregate contract purchase price of approximately $54.8 million, comprised of four industrial buildings. There can be no assurance that we will complete the acquisition of the properties under contract.
Status of Secured Mortgage Notes
Subsequent to September 30, 2020, we entered into a secured fixed-rate mortgage note in the amount of $118.5 million with an interest rate of 2.90% and a term of seven years. The assets and credit of each of our properties pledged as collateral for our mortgage notes are not available to satisfy our other debt and obligations, unless we first satisfy the mortgage notes payable on the respective underlying properties.
CONTRACTUAL OBLIGATIONS
A summary of future obligations as of December 31, 2019 was disclosed in our 2019 Form 10-K. Except as otherwise disclosed in “Note 6 to the Condensed Consolidated Financial Statements” relating to borrowings under our line of credit and term loan, there have been no material changes outside the ordinary course of business from the future obligations disclosed in our 2019 Form 10-K.
OFF-BALANCE SHEET ARRANGEMENTS
As of September 30, 2020, we had no off-balance sheet arrangements that have or are reasonably likely to have a material effect, on our financial condition, changes in our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources.
RECENTLY ISSUED ACCOUNTING STANDARDS
In August 2020, the FASB issued ASU 2020-06, “Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40)” (“ASU 2020-06”), which updates various codification topics to simplify the accounting guidance for certain financial instruments with characteristics of liabilities and equity, with a specific focus on convertible instruments and the derivative scope exception for contracts in an entity’s own equity. ASU 2020-06 is effective for annual and interim reporting periods beginning after December 15, 2021, with early adoption permitted for annual and interim reporting periods beginning after December 15, 2020. We plan to adopt ASU 2020-06 when it becomes effective for us, as of the reporting period beginning January 1, 2021. Our initial analysis indicates that the adoption of this standard will not have a material effect on our condensed consolidated financial statements.
40
CRITICAL ACCOUNTING ESTIMATES
Our unaudited condensed consolidated financial statements have been prepared in accordance with GAAP and in conjunction with the rules and regulations of the SEC. The preparation of our unaudited condensed consolidated financial statements requires significant management judgments, assumptions, and estimates about matters that are inherently uncertain. These judgments affect the reported amounts of assets and liabilities and our disclosure of contingent assets and liabilities at the dates of the condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting periods. With different estimates or assumptions, materially different amounts could be reported in our condensed consolidated financial statements. Additionally, other companies may utilize different estimates that may impact the comparability of our results of operations to those of companies in similar businesses. For a detailed description of our critical accounting estimates, see Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2019 Form 10-K. As of September 30, 2020, our critical accounting estimates have not changed from those described in our 2019 Form 10-K.
41
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Interest Rate Risk
We may be exposed to the impact of interest rate changes. Our interest rate risk management objectives are to limit the impact of interest rate changes on earnings and cash flows, and optimize overall borrowing costs. To achieve these objectives, we plan to borrow on a fixed interest rate basis for longer-term debt and utilize interest rate swap agreements on certain variable interest rate debt in order to limit the effects of changes in interest rates on our results of operations. As of September 30, 2020, our consolidated debt outstanding consisted of borrowings under our term loan and mortgage notes.
Fixed Interest Rate Debt. As of September 30, 2020, our consolidated fixed interest rate debt consisted of $350.0 million under our term loan, which was effectively fixed through the use of interest swap agreements, and $49.3 million of principal borrowings under our mortgage notes. In total, our fixed rate debt represented approximately 86.0% of our total consolidated debt as of September 30, 2020. The impact of interest rate fluctuations on our consolidated fixed interest rate debt will generally not affect our future earnings or cash flows unless such borrowings mature, are otherwise terminated or payments are made on the principal balance. However, interest rate changes could affect the fair value of our fixed interest rate debt. As of September 30, 2020, the fair value and the carrying value of our consolidated fixed interest rate debt, excluding the values of hedges, were $396.6 million and $399.3 million, respectively. The fair value estimate of our fixed interest rate debt was estimated using a discounted cash flow analysis utilizing rates we would expect to pay for debt of a similar type and remaining maturity if the loans were originated on September 30, 2020. Based on our debt as of September 30, 2020, we do not expect that market fluctuations in interest rates will have a significant impact on our future earnings or operating cash flows.
Variable Interest Rate Debt. As of September 30, 2020, our consolidated variable interest rate debt consisted of $65.0 million under our term loan, which represented 14.0% of our total consolidated debt. Interest rate changes on the variable portion of our consolidated variable-rate debt could impact our future earnings and cash flows, but would not significantly affect the fair value of such debt. As of September 30, 2020, we were exposed to market risks related to fluctuations in interest rates on $65.0 million of consolidated borrowings. A hypothetical 25 basis points increase in the all-in interest rate on the outstanding balance of our consolidated variable interest rate debt as of September 30, 2020, would increase our annual interest expense by approximately $0.2 million.
Derivative Instruments. As of September 30, 2020, we had seven outstanding interest rate swaps that were designated as cash flow hedges of interest rate risk, with a total notional amount of $350.0 million. See “Note 6 to the Condensed Consolidated Financial Statements” for further detail on our interest rate swaps. We are exposed to credit risk of the counterparty to our interest rate swap agreements in the event of non-performance under the terms of the agreements. If we were not able to replace these swaps in the event of non-performance by the counterparty, we would be subject to variability of the interest rate on the amount outstanding under our term loan that is fixed through the use of the swaps.
ITEM 4. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
Under the direction of our Chief Executive Officer and Chief Financial Officer, we evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of September 30, 2020. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of September 30, 2020, our disclosure controls and procedures were effective.
Internal Control Over Financial Reporting
There have not been any changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the nine months ended September 30, 2020 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. We have not experienced any material impact to our internal control over financial reporting to date as a result of many of the employees of our Advisor and its affiliates working remotely due to the COVID-19 pandemic. We are continually monitoring and assessing the COVID-19 pandemic on our internal controls to minimize the impact to their design and operating effectiveness.
42
In addition to the other information set forth in this report, you should carefully consider the risk factors discussed in Part I, Item 1A, “Risk Factors” of our 2019 Form 10-K and Part II, Item 1A, “Risk Factors” of our Form 10-Q for the three months ended March 31, 2020 (the “First Quarter 2020 10-Q”), which could materially affect our business, financial condition, and/or future results. The risks described in our 2019 Form 10-K and our First Quarter 2020 10-Q are not the only risks facing us. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition, and/or operating results.
With the exception of the risk factors set forth below, which update the risk factors disclosed in our 2019 Form 10-K and our First Quarter 2020 10-Q, there have been no material changes to the risk factors disclosed in our 2019 Form 10-K and our First Quarter 2020 10-Q.
RISKS RELATED TO OUR GENERAL BUSINESS OPERATIONS AND OUR CORPORATE STRUCTURE
The current outbreak of the novel coronavirus, or COVID-19, has caused severe disruptions in the U.S. and global economy and will likely have an adverse impact on our financial condition and results of operations. This impact could be materially adverse to the extent the current COVID-19 outbreak, or future pandemics, cause customers to be unable to pay their rent or reduce the demand for commercial real estate, or cause other impacts described below.
In December 2019, a novel strain of coronavirus (COVID-19) was reported to have surfaced in Wuhan, China. COVID-19 has since spread to over 100 countries, including the United States. COVID-19 has also spread to every state in the United States. On March 11, 2020 the World Health Organization declared COVID-19 a pandemic, and on March 13, 2020 the United States declared a national emergency with respect to COVID-19.
The outbreak of COVID-19 in many countries, including the United States, continues to adversely impact global economic activity and has contributed to significant volatility and negative pressure in financial markets. The global impact of the outbreak has been rapidly evolving and, as cases of the virus have continued to be identified in additional countries, many countries, including the United States, have reacted by instituting quarantines and restrictions on travel.
Between March and May 2020, nearly all U.S. cities and states, including cities and states where our properties are located, have also reacted by instituting quarantines, restrictions on travel, “shelter in place” rules, restrictions on types of business that may continue to operate, and/or restrictions on types of construction projects that may continue. Beginning in early May 2020, parts of the U.S. began to ease the lockdown restrictions and allow for the reopening of businesses. The gradual reopening of retail, manufacturing, and office facilities came with required or recommended safety protocols. However, due to the recent increases in COVID-19 cases, these lockdown restrictions may be reinstated in certain areas to varying degrees in the future. Additionally, there is no assurance that the reopening of businesses, even if those businesses adhere to recommended safety protocols, will enable us or many of our customers to avoid adverse effects on our and our customers’ operations and businesses. The COVID-19 outbreak has had, and future pandemics could have, a significant adverse impact on economic and market conditions of economies around the world, including the United States, and has triggered a period of global economic slowdown or global recession.
The effects of COVID-19 or another pandemic could adversely affect us and/or our customers due to, among other factors:
• | the unavailability of personnel, including executive officers and other leaders that are part of the management team and the inability to recruit, attract and retain skilled personnel—to the extent management or personnel are impacted in significant numbers by the outbreak of pandemic or epidemic disease and are not available or allowed to conduct work—business and operating results may be negatively impacted; |
• | difficulty accessing debt and equity capital on attractive terms, or at all—a severe disruption and instability in the global financial markets or deteriorations in credit and financing conditions may affect our and our customers’ ability to access capital necessary to fund business operations or replace or renew maturing liabilities on a timely basis, and may adversely affect the valuation of financial assets and liabilities, any of which could affect our ability to meet liquidity and capital expenditure requirements or have a material adverse effect on our business, financial condition, results of operations and cash flows; |
• | an inability to operate in affected areas, or delays in the supply of products or services from the vendors that are needed to operate effectively; |
• | customers’ inability to pay rent on their leases or our inability to re-lease space that is or becomes vacant, which inability, if extreme, could cause us to: (i) no longer be able to pay distributions at our current rates or at all in order to preserve liquidity and (ii) be unable to meet our debt obligations to lenders, which could cause us to lose title to the properties securing such |
43
debt, trigger cross-default provisions, or could cause us to be unable to meet debt covenants, which could cause us to have to sell properties or refinance debt on unattractive terms; |
• | Uncertainty related to whether the U.S. Congress or state legislatures will pass additional laws providing for additional economic stimulus packages, governmental funding, or other relief programs, whether such measures will be enacted, whether our customers will be eligible or will apply for any such funds, whether the funds, if available, could be used by our customers to pay rent, and whether such funds will be sufficient to supplement our customers’ rent and other obligations to us; |
• | an inability to ensure business continuity in the event our continuity of operations plan is not effective or improperly implemented or deployed during a disruption; |
• | our inability to raise capital in our ongoing public offering, if investors are reluctant to purchase our shares; |
• | our inability to deploy capital due to slower transaction volume which may be dilutive to stockholders; and |
• | our inability to satisfy redemption requests and preserve liquidity, if demand for redemptions exceeds the limits of our share redemption program or ability to fund redemptions. |
Because our property investments are located in the United States, COVID-19 continues to impact our properties and operating results given its continued spread within the United States reduces occupancy, increases the cost of operation, results in limited hours or necessitates the closure of such properties. In addition, quarantines, states of emergencies and other measures taken to curb the spread of COVID-19 may negatively impact the ability of such properties to continue to obtain necessary goods and services or provide adequate staffing, which may also adversely affect our properties and operating results.
Customers and potential customers of the properties we own operate in industries that are being adversely affected by the disruption to business caused by this global outbreak. Customers or operators have been, and may in the future be, required to suspend operations at our properties for what could be an extended period of time. Whereas a number of our customers requested rent deferrals in the second quarter of 2020, these requests significantly decreased in the third quarter. However, more customers may request rent deferrals or may not pay rent in the future. This could lead to increased customer delinquencies and/or defaults under leases, a lower demand for rentable space leading to increased concessions or lower occupancy, and/or tenant improvement expenditures, or reduced rental rates to maintain occupancies. Our operations could be materially negatively affected if the economic downturn is prolonged, which could adversely affect our operating results, ability to pay our distributions, our ability to repay or refinance our debt, and the value of our shares.
The rapid development and fluidity of this situation precludes any prediction as to the ultimate impact of COVID-19. The full extent of the impact and effects of COVID-19 on our future financial performance, as a whole, and, specifically, on our real estate property holdings are uncertain at this time. The impact will depend on future developments, including, among other factors, the duration and spread of the outbreak, along with related travel advisories and restrictions, the recovery time of the disrupted supply chains, the consequential staff shortages, and production delays, and the uncertainty with respect to the duration of the global economic slowdown. COVID-19 and the current financial, economic and capital markets environment, and future developments in these and other areas present uncertainty and risk with respect to our performance, financial condition, results of operations, cash flows, and value of our shares.
The current outbreak of COVID-19 and resulting impacts on the U.S. economy and financial markets has created extreme uncertainty and volatility with respect to the current and future values of real estate, and therefore our NAV per share, as well as the market value of our debt (including associated interest rate hedges). As a result, our NAV per share may not reflect the actual realizable value of our underlying properties at any given time or the market value of our debt (including associated interest rate hedges).
44
The current outbreak of COVID-19 and resulting impacts on the U.S. economy and financial markets have created extreme uncertainty and volatility with respect to the current and future values of real estate and real estate-related assets, borrowings and hedges. The recent COVID-19 pandemic is expected to continue to have a significant impact on local, national and global economies and has resulted in a world-wide economic slowdown. The fallout from the ongoing pandemic on our investments is uncertain; however, it has had a negative impact on the overall real estate market, with a particularly adverse impact on certain sectors, including hospitality, shopping malls, gaming, and student living. In addition, slower transaction volume may result in less data for assessing real estate values. This increases the risk that our NAV per share may not reflect the actual realizable value of our underlying properties at any given time, as valuations and appraisals of our properties and real estate-related assets are only estimates of market value as of the end of the prior month and may not reflect the changes in values resulting from the COVID-19 pandemic, as this impact is occurring rapidly and is not immediately quantifiable. To the extent real estate values decline after the date we disclose our NAV, whether due to the COVID-19 pandemic or otherwise, (i) we may overpay to redeem our shares, which would adversely affect the investment of non-redeeming stockholders, and (ii) new investors may overpay for their investment in our common stock, which would heighten their risk of loss. Furthermore, because we generally do not mark to market our property-level mortgages and corporate-level credit facilities that are intended to be held to maturity or our associated interest rate hedges that are intended to be held to maturity, the realizable value of our company or our assets that are encumbered by debt may be higher or lower than the value used in the calculation of our NAV. This risk may be exacerbated by the current market volatility, which can lead to large and sudden swings in the fair value of our assets and liabilities. We currently estimate the fair value of our debt (inclusive of associated interest rate hedges) that was intended to be held to maturity as of September 30, 2020 was $9.6 million higher than par for such debt in aggregate, meaning that if we used the fair value of our debt rather than par (and treated the associated hedge as part of the same financial instrument), our NAV would be lower by approximately $9.6 million, or $0.07 per share, as of September 30, 2020.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
Share Redemption Program
Subject to certain restrictions and limitations, our share redemption program may provide a limited opportunity for stockholders to have shares of our common stock redeemed for cash. To the extent our board of directors determines that we have sufficient available cash for redemptions, we initially intend to redeem shares under our share redemption program on a monthly basis; however, our board of directors may determine from time to time to adjust the timing of redemptions or suspend, terminate or otherwise modify our share redemption program.
While stockholders may request on a monthly basis that we redeem all or any portion of their shares pursuant to our share redemption program, we are not obligated to redeem any shares and may choose to redeem only some, or even none, of the shares that have been requested to be redeemed in any particular month, in our discretion. In addition, our ability to fulfill redemption requests is subject to a number of limitations. As a result, share redemptions may not be available each month. Under our share redemption program, to the extent we determine to redeem shares in any particular month, we will only redeem shares as of the last calendar day of that month (each such date, a “Redemption Date”). Redemptions will be made at the transaction price in effect on the Redemption Date, except that all shares of our common stock that have not been outstanding for at least one year will be redeemed at 95.0% of the transaction price and Class T shares that have been outstanding for at least one year but less than two years will be redeemed at 97.5% of the transaction price. Each of these deductions is referred to as an “Early Redemption Deduction.” An Early Redemption Deduction will not be applied with respect to: (i) Class W shares and Class I shares that have been outstanding for at least one year; and (ii) Class T shares that have been outstanding for at least two years. The “transaction price” generally will be equal to the NAV per share of our common stock most recently disclosed by us. We will redeem shares at a price that we believe reflects the NAV per share of such stock more appropriately than the most recently disclosed monthly NAV per share, including by updating a previously disclosed transaction price, in cases where we believe there has been a material change (positive or negative) to the NAV per share relative to the most recently disclosed monthly NAV per share. An Early Redemption Deduction may be waived in certain circumstances including: (i) in the case of redemption requests arising from the death or qualified disability of the holder; (ii) in the event that a stockholder’s shares are redeemed because the stockholder has failed to maintain the $2,000 minimum account balance; or (iii) with respect to shares purchased through our distribution reinvestment plan or received from us as a stock dividend. To have shares redeemed, a stockholder’s redemption request and required documentation must be received in good order by 4:00 p.m. (Eastern time) on the second to last business day of the applicable month. Settlements of share redemptions will be made within three business days of the Redemption Date. An investor may withdraw its redemption request by notifying the transfer agent before 4:00 p.m. (Eastern time) on the last business day of the applicable month.
Under our share redemption program, we may redeem during any calendar month shares whose aggregate value (based on the price at which the shares are redeemed) is 2.0% of our aggregate NAV as of the last calendar day of the previous quarter and during any calendar quarter whose aggregate value (based on the price at which the shares are redeemed) is up to 5.0% of our aggregate NAV as
45
of the last calendar day of the prior calendar quarter. During a given quarter, if in each of the first two months of such quarter the 2.0% redemption limit is reached and stockholders’ redemptions are reduced pro rata for such months, then in the third and final month of that quarter, the applicable limit for such month will likely be less than 2.0% of our aggregate NAV as of the last calendar day of the previous month because the redemptions for that month, combined with the redemptions in the previous two months, cannot exceed 5.0% of our aggregate NAV as of the last calendar day of the prior calendar quarter.
Although the vast majority of our assets consist of properties that cannot generally be readily liquidated on short notice without impacting our ability to realize full value upon their disposition, we intend to maintain a number of sources of liquidity including: (i) cash equivalents (e.g. money market funds), other short-term investments, U.S. government securities, agency securities and liquid real estate-related securities; and (ii) one or more borrowing facilities. We may fund redemptions from any available source of funds, including operating cash flows, borrowings, proceeds from our public offering and/or sales of our assets.
Should redemption requests, in our judgment, place an undue burden on our liquidity, adversely affect our operations or risk having an adverse impact on us as a whole, or should we otherwise determine that investing our liquid assets in real properties or other illiquid investments rather than redeeming our shares is in the best interests of the company as a whole, then we may choose to redeem fewer shares than have been requested to be redeemed, or none at all. In the event that we determine to redeem some but not all of the shares submitted for redemption during any month for any of the foregoing reasons, shares submitted for redemption during such month will be redeemed on a pro rata basis. All unsatisfied redemption requests must be resubmitted after the start of the next month or quarter, or upon the recommencement of the share redemption program, as applicable. If the transaction price for the applicable month is not made available by the tenth business day prior to the last business day of the month (or is changed after such date), then no redemption requests will be accepted for such month and stockholders who wish to have their shares redeemed the following month must resubmit their redemption requests.
The preceding summary does not purport to be a complete summary of our share redemption program and is qualified in its entirety by reference to the share redemption program, which is incorporated by reference as Exhibit 4.1 to this Quarterly Report on Form 10-Q.
Refer to Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for additional details regarding our redemption history.
The table below summarizes the redemption activity for the three months ended September 30, 2020:
(1) | We limit the number of shares that may be redeemed per calendar quarter under the program as described above. |
46
The exhibits required by this item are set forth on the Exhibit Index attached hereto.
EXHIBIT INDEX
Exhibit
|
|
Description |
---|---|---|
|
|
|
3.1 |
|
|
|
|
|
3.2 |
|
|
|
|
|
3.3 |
|
|
|
|
|
4.1 |
|
|
|
|
|
4.2 |
|
|
|
|
|
4.3 |
|
|
|
|
|
10.1* |
|
|
|
|
|
10.2* |
|
|
|
|
|
10.3* |
|
|
|
|
|
10.4* |
|
|
|
|
|
10.5* |
|
|
|
|
|
10.6* |
|
|
|
|
|
10.7* |
|
|
|
|
|
47
Exhibit
|
|
Description |
---|---|---|
|
|
|
10.8* |
|
|
|
|
|
10.9* |
|
|
|
|
|
10.10* |
|
|
|
|
|
10.11* |
|
|
|
|
|
10.12* |
|
|
|
|
|
10.13 |
|
|
|
|
|
31.1* |
|
|
|
|
|
31.2* |
|
|
|
|
|
32.1** |
|
|
|
|
|
99.1* |
|
|
|
|
|
99.2 |
|
|
|
|
|
101 |
|
The following materials from Black Creek Industrial REIT IV Inc.’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2020, filed on November 10, 2020, formatted in XBRL (eXtensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Operations, (iii) Condensed Consolidated Statements of Comprehensive Income (Loss), (iv) Condensed Consolidated Statements of Equity, (v) Condensed Consolidated Statements of Cash Flows, and (vi) Notes to the Condensed Consolidated Financial Statements. |
* |
Filed herewith. |
** |
Furnished herewith. |
48
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
|
|
|
|
|
BLACK CREEK INDUSTRIAL REIT IV INC. |
||
|
|
|
|
November 10, 2020 |
By: |
/s/ JEFFREY W. TAYLOR |
|
|
|
Jeffrey W. Taylor Managing Director, Co-President (Principal Executive Officer) |
|
|
|
|
|
November 10, 2020 |
By: |
/s/ SCOTT A. SEAGER |
|
|
|
Scott A. Seager Senior Vice President, Chief Financial Officer and Treasurer (Principal Financial Officer and Principal Accounting Officer) |
49
Exhibit 10.1
INTEREST PURCHASE AGREEMENT BETWEEN
BCI IV PORTFOLIO REAL ESTATE HOLDCO LLC
AND
INDUSTRIAL PROPERTY OPERATING PARTNERSHIP LP
DATED AS OF JULY 15, 2020
TABLE OF CONTENTS
|
|
|
|
|
Page |
ARTICLE 1 DEFINITIONS |
2 |
|
Section 1.1 |
Definitions |
2 |
Section 1.2 |
Interpretation and Rules of Construction |
9 |
ARTICLE 2 PURCHASE AND SALE; CLOSING |
10 |
|
Section 2.2 |
Sale and Purchase of the IPT Holdco Interests |
10 |
Section 2.2 |
Closing |
10 |
Section 2.3 |
Closing Deliveries |
10 |
Section 2.4 |
Purchase Price |
11 |
Section 2.5 |
Withdrawal and Substitution |
11 |
Section 2.6 |
Transfer Taxes |
11 |
Section 2.7 |
REIT Status of the BTC REITs |
12 |
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF COMPANY OP |
12 |
|
Section 3.1 |
Organization and Qualification |
12 |
Section 3.2 |
Organizational Documents |
12 |
Section 3.3 |
Capital Structure |
13 |
Section 3.4 |
Authority |
14 |
Section 3.5 |
No Conflict; Required Filings and Consents |
15 |
Section 3.6 |
Permits; Compliance with Law |
15 |
Section 3.7 |
Financial Statements; No Undisclosed Material Liabilities |
16 |
Section 3.8 |
No Default |
17 |
Section 3.9 |
Litigation |
17 |
Section 3.10 |
Taxes |
17 |
Section 3.11 |
Benefit Plans; Employees |
19 |
Section 3.12 |
Intellectual Property |
19 |
Section 3.13 |
Environmental Matters |
20 |
Section 3.14 |
Properties |
20 |
Section 3.15 |
Material Contracts |
23 |
Section 3.16 |
Insurance |
23 |
Section 3.17 |
Brokers |
23 |
Section 3.18 |
Related-Party Transactions |
24 |
Section 3.19 |
Investment Company Act |
24 |
Section 3.20 |
No Other Representations and Warranties |
24 |
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF BCI IV HOLDCO |
24 |
|
Section 4.1 |
Organization and Qualification |
24 |
Section 4.2 |
Authority |
24 |
Section 4.3 |
No Conflict; Required Filings and Consents |
25 |
Section 4.4 |
Investment Representation |
26 |
Section 4.5 |
Taxes |
26 |
ARTICLE 5 GENERAL PROVISIONS |
26 |
|
Section 5.1 |
Nonsurvival of Representations, Warranties, Covenants and Agreements |
26 |
Section 5.2 |
Public Announcements |
26 |
Section 5.3 |
Notices |
27 |
Section 5.4 |
Severability |
28 |
Section 5.5 |
Counterparts |
28 |
Section 5.6 |
Entire Agreement; No Third-Party Beneficiaries |
28 |
i
Section 5.7 |
Amendment |
29 |
Section 5.8 |
Governing Law |
29 |
Section 5.9 |
Consent to Jurisdiction |
29 |
Section 5.10 |
Assignment |
30 |
Section 5.11 |
Remedies |
30 |
Section 5.12 |
Waiver of Jury Trial |
30 |
Section 5.13 |
Authorship |
30 |
ii
INTEREST PURCHASE AGREEMENT
This INTEREST PURCHASE AGREEMENT, dated as of July 15, 2020 (this “Agreement”), is by and between BCI IV Portfolio Real Estate Holdco LLC (“BCI IV Holdco”), a Delaware limited liability company and an indirect subsidiary of Black Creek Industrial REIT IV Inc., a Maryland corporation (“BCI IV”), and Industrial Property Operating Partnership LP (“Company OP”), a Delaware limited partnership and a direct subsidiary of Industrial Property Trust, a Maryland real estate investment trust (the “Company). Each of BCI IV Holdco and Company OP is sometimes referred to herein as a “Party” and collectively as the “Parties.” Capitalized terms used but not otherwise defined herein have the meanings ascribed to them in Article 1.
WHEREAS, upon the terms and subject to the conditions set forth in this Agreement, Company OP desires to sell, and BCI IV Holdco desires to purchase, all of Company OP’s ownership interests (the “IPT Holdco Interests”) in IPT Real Estate Holdco LLC, a Delaware limited liability company and wholly owned subsidiary of Company OP (“IPT Holdco”) (such transaction, the “Interest Sale”);
WHEREAS, substantially all of the assets of IPT Holdco consists of general and limited partner interests in Build-To-Core Industrial Partnership I LP and Build-To-Core Industrial Partnership II LP;
WHEREAS, the Board of Trustees of the Company (the “Company Board”) has established a special committee consisting solely of independent trustees (the “Company Special Committee”) to, among other things, evaluate and, if desirable, negotiate a potential transaction with BCI IV or one or more of its subsidiaries with respect to the IPT Holdco Interests;
WHEREAS, the Board of Directors of BCI IV (the “BCI IV Board”) has established a special committee consisting solely of independent directors (the “BCI IV Special Committee”) to, among other things, evaluate and, if desirable, negotiate a potential transaction with the Company or one or more of its subsidiaries with respect to the IPT Holdco Interests;
WHEREAS, the Company Board, following the unanimous approval and recommendation of the Company Special Committee, has (i) on behalf of the Company, (a) determined that the sale of the Company’s indirect interests in IPT Holdco (including its indirect interests in Build-To-Core Industrial Partnership I LP and Build-To-Core Industrial Partnership II LP) pursuant to the Interest Sale and the other transactions contemplated by the Interest Purchase Agreement are advisable and in the best interests of Company and its shareholders, (b) determined that the sale of the Company’s indirect interests IPT Holdco (including its indirect in interests in Build-To-Core Industrial Partnership I LP and Build-To-Core Industrial Partnership II LP) pursuant to the Interest Sale and the other transactions contemplated by the Interest Purchase Agreement are fair and reasonable to the Company and on terms and conditions no less favorable to the Company than those available from an unaffiliated third party and (c) authorized and approved the sale of the Company’s indirect interests in IPT Holdco (including its indirect interests in Build-To-Core Industrial Partnership I LP and Build-To-Core Industrial Partnership
II LP) pursuant to the Interest Sale and the other transactions contemplated by the Interest Purchase Agreement, and (ii) on behalf of the Company in its capacity as the sole general partner of Company OP, on behalf of Company OP, (a) determined that the Interest Sale and other transactions contemplated by the Interest Purchase Agreement are advisable and in the best interests of Company OP and its partners and (b) authorized, approved and adopted the Interest Purchase Agreement and authorized and approved the negotiation, execution, delivery and performance by Company OP of the Interest Purchase Agreement and consummation of each of the transactions contemplated thereby (including, without limitation, the Interest Sale);
WHEREAS, the BCI IV Board, following the unanimous approval and recommendation of the BCI IV Special Committee, has (i) determined that (a) this Agreement, the Interest Sale and the other transactions contemplated by this Agreement are advisable and in the best interests of BCI IV and are fair and reasonable to BCI IV, (b) there is substantial justification for the amount by which the Purchase Price exceeds the amount that Company OP invested in IPT Holdco and that the Purchase Price is reasonable, and (c) the joint venture terms of Build-To- Core Industrial Partnership I LP and Build-To-Core Industrial Partnership II LP are fair and reasonable to BCI IV and on terms and conditions that are no less favorable than those that would be available to unaffiliated parties, and (ii) approved this Agreement, the Interest Sale and the other transactions contemplated by this Agreement and authorized BCI IV, in its capacity as the sole general partner of BCI IV Operating Partnership LP, a Delaware limited partnership (“BCI IV OP”), on behalf of BCI IV OP, in its capacity as the sole member of BCI IV Holdco, on behalf of BCI IV Holdco, to execute, deliver and perform the Purchase Agreement;
WHEREAS, for U.S. federal income tax purposes, it is intended that the Interest Sale will be treated as a taxable sale of all of the IPT Holdco Interests by Company OP to BCI IV Holdco; and
WHEREAS, the Parties desire to make certain representations, warranties, covenants and agreements in connection with the execution of this Agreement.
NOW THEREFORE, in consideration of the foregoing and the mutual representations, warranties, covenants and agreements contained in this Agreement, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties, intending to be legally bound, agree as follows:
DEFINITIONS
Section 1.1Definitions.
“Action” means any claim, action, cause of action, suit, litigation, proceeding, arbitration, mediation, interference, audit, assessment, hearing or other legal proceeding (whether sounding in contract, tort or otherwise, whether civil or criminal) brought, conducted, tried or heard by or before, or otherwise involving, any Governmental Authority.
2
“Affiliate” of a specified Person means a Person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such specified Person. For the avoidance of doubt, for purposes of this Agreement, Company, Company OP and their subsidiaries shall not be deemed to be Affiliates of BCI IV, BCI IV OP, BCI IV Holdco and their subsidiaries.
“Benefit Plan” means any “employee benefit plan” (within the meaning of Section 3(3) of ERISA) and any employment, consulting, termination, severance, change in control, separation, stock option, restricted stock, profits interest unit, performance award, outperformance, stock purchase, stock or stock-related awards, deferred compensation, bonus, incentive compensation, fringe benefit, health, medical, dental, disability, accident, life insurance, welfare benefit, cafeteria, vacation, sick or paid time off, perquisite, retirement, profit sharing, pension, or savings or any other remuneration, compensation or employee benefit plan, agreement, program, policy or other arrangement of any kind, whether or not subject to ERISA and whether written or unwritten, or funded or unfunded.
“BCI IV Material Adverse Effect” means any Event that would reasonably be expected to prevent or materially impair or delay the ability of BCI IV Holdco to perform its material obligations hereunder or to consummate any of the transactions contemplated by this Agreement.
“BTC Entities” means (i) Build-To-Core Industrial Partnership I LP and Build-To-Core Industrial Partnership II LP, and (ii) each of the direct and indirect subsidiaries of the entities set forth in clause (i) of this definition of “BTC Entities.” For the avoidance of doubt, the BTC REITs are included in BTC Entities.
“BTC REITs” means BTC I REIT A LLC, a Delaware limited liability company, BTC I REIT B LLC, a Delaware limited liability company, and BTC II Holdco LLC, a Delaware limited liability company.
“Business Day” means any day other than a Saturday, Sunday or any day on which banks located in New York, New York or Denver, Colorado are authorized or required to be closed.
“Code” means the Internal Revenue Code of 1986, as amended.
“Company Leases” means each lease or sublease (including any ground lease) that (i) was in effect as of the date hereof and (ii) to which any IPT Holdco Subsidiary is a party as lessor or sublessor with respect to any Company Property (together with all amendments, modifications, supplements, renewals, exercise of options and extensions related thereto).
“Company Material Adverse Effect” means any Event that (i) is material and adverse to the business, assets, liabilities, condition (financial or otherwise) or results of operations of the IPT Holdco Subsidiaries, taken as a whole, or (ii) will prevent or materially impair or delay the ability of Company OP to consummate the Interest Sale or any of the transactions contemplated by this Agreement; provided that for purposes of clause (i) “Company Material Adverse Effect” shall not include any Event to the extent arising out of or resulting from (A) any failure of any IPT Holdco Subsidiary to meet any projections or forecasts or any estimates of earnings, revenues or other metrics for any period (provided that any Event giving rise to such failure may
3
be taken into account in determining whether there has been a Company Material Adverse Effect), (B) any changes that affect the real estate industry generally, (C) any changes in the United States or global economy or capital, financial or securities markets generally, including changes in interest or exchange rates, (D) any changes in the legal, regulatory or political conditions in the United States or in any other country or region of the world, (E) the commencement, escalation or worsening of a war or armed hostilities or the occurrence of acts of terrorism or sabotage, (F) the negotiation, execution, or delivery of this Agreement, or performance in accordance with the terms of this Agreement, or the public announcement of the Interest Sale or the other transactions contemplated hereby, including the impact thereof on relationships, contractual or otherwise, with tenants, suppliers, lenders, investors (including stockholders), venture partners or employees, (G) earthquakes, hurricanes, floods or other natural disasters, (H) changes in Law or GAAP (or the interpretation or enforcement thereof), or (I) any Action, made or initiated by any holder of common stock of the Company, including any derivative claims, arising out of or relating to this Agreement or the transactions contemplated hereby, which in the case of each of clauses (B), (C), (D), (E) and (H) do not disproportionately affect the IPT Holdco Subsidiaries, taken as a whole, relative to other Persons in the industrial real estate industry in the United States, and in the case of clause (G), do not disproportionately affect the IPT Holdco Subsidiaries, taken as a whole, relative to other Persons in the real estate industry in the geographic regions in which the IPT Holdco Subsidiaries operate, own or lease properties.
“Company Material Contract” means any contract (other than contracts that (x) are terminable upon not more than thirty (30) days’ notice without a penalty or premium, or (y) are among IPT Holdco Subsidiaries) to which any IPT Holdco Subsidiary is a party to or bound by that, as of the date hereof:
4
For the avoidance of doubt, the term “Company Material Contract” does not include any Company Leases.
“Company Partnership Agreement” means that certain Third Amended and Restated Limited Partnership Agreement of Company OP, dated as of February 3, 2020, as such agreement may be amended from to time.
“Company Permitted Liens” means any of the following: (i) Liens for Taxes or governmental assessments, charges or claims of payment not yet due, that are being contested in good faith or for which adequate accruals or reserves have been established; (ii) Liens that are a cashier’s, landlord’s, carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s or other similar Liens arising in the ordinary course of business; (iii) Liens that are a zoning regulation, entitlement or other land use or environmental regulation by any Governmental Authority; (iv) Liens that are disclosed on the most recent consolidated balance sheet of the Company or notes thereto (or securing liabilities reflected on such balance sheet); (v) Liens arising under any Company Material Contracts, or leases to third parties for the occupation of portions of Company Properties as tenants only by such third parties in the ordinary course of the business of any IPT Holdco Subsidiary; (vi) non-monetary Liens that are recorded in a public record or disclosed on existing title policies or surveys; or (vii) non-monetary Liens, limitations, title defects, covenants, restrictions or reservations of interests in title that are disclosed on existing title policies or do not interfere materially with the current use of the property affected thereby (assuming its continued use in the manner in which it is currently used) or materially adversely affect the value or marketability of such property.
5
“Company Properties” means each real property owned, or leased (including ground leased) as lessee or sublessee, in whole or in part, by any IPT Holdco Subsidiary as of the date hereof (including all buildings, structures and other improvements and fixtures located on or under such real property and all easements, rights and other appurtenances to such real property).
“DSOS” means the Secretary of State of the State of Delaware.
“Event” means an effect, event, change, development, circumstance, condition or occurrence.
“Environmental Law” means any Law (including common law) relating to the pollution or protection of the environment (including air, surface water, groundwater, land surface or subsurface land), or human health or safety (solely as such matters relate to Hazardous Substances), including Laws relating to the use, handling, presence, transportation, treatment, storage, disposal, release or discharge of Hazardous Substances.
“Environmental Permit” means any permit, approval, license or other authorization required under any applicable Environmental Law.
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.
“ERISA Affiliate” means, with respect to an entity (the “Referenced Entity”), any other entity, which, together with such Referenced Entity, would be treated as a single employer under Code Section 414 or ERISA Section 4001.
“Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
“GAAP” means the United States generally accepted accounting principles.
“Governmental Authority” means the United States (federal, state or local) government or any foreign government, or any other governmental or quasi-governmental regulatory, judicial or administrative authority, instrumentality, board, bureau, agency, commission, self-regulatory organization, arbitration panel or similar entity.
“Hazardous Substances” means (i) any “hazardous substance” as that term is defined under the Comprehensive Environmental Response, Compensation and Liability Act, (ii) any “hazardous waste” as that term is defined under the Resource Conservation and Recovery Act, and (iii) petroleum and petroleum products, including crude oil and any fractions thereof, polychlorinated biphenyls, asbestos and radon.
“Indebtedness” means, with respect to any Person and without duplication, (i) the principal of and premium (if any) of all indebtedness, notes payable, accrued interest payable or other obligations for borrowed money, whether secured or unsecured, (ii) all obligations under conditional sale or other title retention agreements, or incurred as financing, in either case with respect to property acquired by such Person, (iii) all obligations issued, undertaken or assumed as the deferred purchase price for any property or assets, (iv) all obligations under capital leases, (v)
6
all obligations in respect of bankers acceptances or letters of credit, (vi) all obligations under interest rate cap, swap, collar or similar transaction or currency hedging transactions, (vii) any guarantee of any of the foregoing, whether or not evidenced by a note, mortgage, bond, indenture or similar instrument, and (viii) any agreement to provide any of the foregoing; provided that for purposes of clarity, “Indebtedness” shall not include trade payables. For purposes of clauses (i) and (vi) of this definition of “Indebtedness”, such obligations shall be valued at the termination value thereof.
“Intellectual Property” means all United States and foreign (i) patents, patent applications, invention disclosures, and all related continuations, continuations-in-part, divisionals, reissues, re-examinations, substitutions and extensions thereof, (ii) trademarks, service marks, trade dress, logos, trade names, corporate names, Internet domain names, design rights and other source identifiers, together with the goodwill symbolized by any of the foregoing, (iii) registered and unregistered copyrights, copyrightable works and database rights,
(iv) confidential and proprietary information, including trade secrets, know-how, ideas, formulae, models, algorithms and methodologies, (v) all rights in the foregoing and in other similar intangible assets, and (vi) all applications and registrations for the foregoing.
“Investment Company Act” means the Investment Company Act of 1940, as amended.
“IPT Holdco Subsidiary” means IPT Holdco and any corporation, partnership, limited liability company, joint venture, business trust, real estate investment trust or other organization, whether incorporated or unincorporated, or other legal entity of which (i) IPT Holdco directly or indirectly owns or controls at least a majority of the capital stock or other equity interests having by their terms ordinary voting power to elect a majority of the board of directors or others performing similar functions, (ii) IPT Holdco or any Person that is an IPT Holdco Subsidiary by reason of the application of clause (i) or clause (iii) of this definition of “IPT Holdco Subsidiary” is a general partner, manager, managing member, operating member, trustee, director or the equivalent, or (iii) IPT Holdco, directly or indirectly, holds a majority of the beneficial, equity, capital, profits or other economic interest. For the avoidance of doubt, the term IPT Holdco Subsidiary shall include IPT BTC I LP LLC, IPT BTC I GP LLC, IPT BTC II LP LLC, IPT BTC II GP LLC and the BTC Entities.
“IRS” means the United States Internal Revenue Service or any successor agency.
“Knowledge” or “Knowledge of Company OP” means the actual knowledge of the persons named in Section 1.1 of the Company Disclosure Letter.
“Law” means any and all domestic (federal, state or local) or foreign laws, rules, regulations and Orders promulgated by any Governmental Authority.
“Lien” means, with respect to any asset (including any security), any mortgage, deed of trust, condition, covenant, lien, pledge, charge, security interest, option or other third party right (including right of first refusal or first offer), restriction, right of way, easement, or title defect or encumbrance of any kind in respect of such asset, including any restriction on the use, voting, transfer, receipt of income or other exercise of any attributes of ownership.
7
“Material Company Lease” means all (i) ground leases under which the interest of a IPT Holdco Subsidiary in Company Properties is a leasehold interest, and (ii) Company Leases with annual rent in excess of $500,000.
“Order” means a judgment, writ, order, injunction or decree of any Governmental Authority.
“Person” means an individual, corporation, partnership, limited partnership, limited liability company, person (including a “person” as defined in Section 13(d)(3) of the Exchange Act), trust, association or other entity or organization (including any Governmental Authority or a political subdivision, agency or instrumentality of a Governmental Authority).
“Property Permit” means any certificate, variance, permit, approval, license or other authorization required from any Governmental Authority having jurisdiction over the applicable Company Property.
“REIT” means a real estate investment trust within the meaning of Section 856 of the
Code.
“Representative” means, with respect to any Person, one or more of such Person’s directors, officers, trustees, members, managers, partners, employees, advisors (including attorneys, accountants, consultants, investment bankers, and financial advisors), agents and other representatives.
“SEC” means the U.S. Securities and Exchange Commission (including the staff thereof).
“Securities Act” means the U.S. Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
“Tax” or “Taxes” means any federal, state, local and foreign income, gross receipts, capital gains, withholding, property, recording, stamp, transfer, sales, use, abandoned property, escheat, franchise, employment, payroll, excise, environmental and any other taxes, duties, assessments or similar governmental charges, together with penalties, interest or additions imposed with respect to such amounts, in each case, imposed by and payable to any Governmental Authority.
“Tax Return” means any return, declaration, report, claim for refund, or information return or statement relating to Taxes filed or required to be filed with a Governmental Authority, including any schedule or attachment thereto, and including any amendment thereof.
Defined Terms |
Location of Definition |
Agreement |
Preamble |
BCI IV |
Recitals |
8
Defined Terms |
Location of Definition |
BCI IV Board |
Recitals |
BCI IV Holdco |
Preamble |
BCI IV OP |
Recitals |
BCI IV Special Committee |
Recitals |
Company |
Preamble |
Company Board |
Recitals |
Company OP |
Preamble |
Company Permits |
Section 3.4(a) |
Company Special Committee |
Recitals |
Company Third Party |
Section 3.14(d) |
Company Title Insurance Policy |
Section 3.14(f) |
Closing |
Section 2.1 |
Closing Date |
Section 2.2 |
Interest Sale |
Recitals |
IPT Holdco |
Recitals |
IPT Holdco Interests |
Recitals |
Maryland Court |
Section 5.9 |
Party(ies) |
Preamble |
Purchase Price |
Section 2.4 |
Rent Roll |
Section 3.14(d) |
SEC |
Section 3.5 |
Transfer Taxes |
Section 2.6 |
Section 1.2Interpretation and Rules of Construction. In this Agreement, except to the extent otherwise provided or that the context otherwise requires:
9
attachments thereto and instruments incorporated therein (and, in the case of statutes, include any rules and regulations promulgated under the statute);
PURCHASE AND SALE; CLOSING
Section 2.1 Sale and Purchase of the IPT Holdco Interests. Effective as of the closing of the Interest Sale (the “Closing”), upon the terms and subject to the conditions set forth in this Agreement, Company OP hereby sells, transfers and delivers to BCI IV Holdco, free and clear of any Liens, all of Company OP’s right, title and interest in, to and under the IPT Holdco Interests, including any and all interests of Company OP in and to all profits, losses, distributions and capital in connection with the IPT Holdco Interests and any and all voting rights of Company OP with respect to the IPT Holdco Interests under the governance documents of IPT Holdco from and after the Closing Date. Effective as of the Closing, BCI IV Holdco hereby receives, purchases, accepts and assumes the IPT Holdco Interests from Company OP.
Section 2.2 Closing. The Closing will take place remotely via an exchange of documents and signatures on the date hereof, or at such other time and place as the Parties may mutually agree upon in writing (the “Closing Date”), at which time the documents and instruments referred to in Section 2.3 of this Agreement will be delivered by the Parties.
Section 2.3Closing Deliveries.
10
Section 2.4 Purchase Price. Upon the terms and subject to the conditions set forth in this Agreement, BCI IV Holdco agrees to deliver to the Company OP on the Closing Date an amount in cash equal to Three Hundred and One Million Dollars ($301,000,000) (the “Purchase Price”) by wire transfer or delivery of other immediately available funds to such account or accounts as specified in writing by Company prior to the Closing.
Section 2.5 Withdrawal and Substitution. Effective as of the Closing, Company OP hereby withdraws from IPT Holdco as a member thereof and does thereupon cease to have or exercise any right or power as a member of IPT Holdco. Effective as of the Closing, BCI IV Holdco is hereby admitted to IPT Holdco as a substitute member with respect to the IPT Holdco Interests, and BCI IV Holdco’s execution of this Agreement signifies its agreement to be bound by the terms and conditions of the limited liability company agreement of IPT Holdco. The Parties agree that the assignment and assumption of the IPT Holdco Interests, the admission of BCI IV Holdco as a substitute member of IPT Holdco and Company OP’s withdrawal as a member of IPT Holdco shall not dissolve IPT Holdco.
Section 2.6 Transfer Taxes. BCI IV Holdco and Company OP shall cooperate in the preparation, execution and filing of all returns, questionnaires, applications or other documents regarding any real property transfer or gains, sales, use, transfer, value added, stock transfer or stamp taxes, any transfer, recording, registration and other fees and any similar Taxes that become payable in connection with the transactions contemplated by this Agreement (together
11
with any related interest, penalties or additions to Tax, “Transfer Taxes”), and shall cooperate in attempting to minimize the amount of Transfer Taxes.
Section 2.7 REIT Status of the BTC REITs. After the Closing Date though the end of the taxable year that includes the Closing Date, BCI IV Holdco shall use its commercially reasonable efforts to maintain the status of each of the BTC REITs as a REIT.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF COMPANY OP
Company OP hereby represents and warrants to BCI IV Holdco that:
Section 3.1Organization and Qualification.
Section 3.2Organizational Documents.
12
Section 3.3Capital Structure.
13
of any such shares or equity interests or which restrict the transfer of any such shares or equity interests.
Section 3.4Authority.
14
advisable and in the best interests of Company OP and its partners and (b) authorized, approved and adopted the Interest Purchase Agreement and authorized and approved the negotiation, execution, delivery and performance by Company OP of the Interest Purchase Agreement and consummation of each of the transactions contemplated thereby (including, without limitation, the Interest Sale), which resolutions remain in full force and effect and have not been subsequently rescinded, modified or withdrawn in any way.
Section 3.5No Conflict; Required Filings and Consents.
Section 3.6Permits; Compliance with Law.
Section 3.7Financial Statements; No Undisclosed Material Liabilities.
16
Section 3.8 No Default. Except as, individually or in the aggregate, would not be reasonably expected to have a Company Material Adverse Effect, no IPT Holdco Subsidiary is in default or violation of any term, condition or provision of (a) the organizational documents of any IPT Holdco Subsidiary, or (b), any loan or credit agreement, note, or any bond, mortgage or indenture, to which any IPT Holdco Subsidiary is a party or by which any IPT Holdco Subsidiary or any of its properties or assets is bound.
Section 3.9 Litigation. Except as individually or in the aggregate would not reasonably be expected to have a Company Material Adverse Effect, as of the date hereof, (a) there is no Action pending or, to the Knowledge of Company OP, threatened against any IPT Holdco Subsidiary and (b) no IPT Holdco Subsidiary, nor any of their respective properties, is subject to any outstanding Order of any Governmental Authority.
Section 3.10 Taxes.
17
the disposition of which would be subject to Treasury Regulation Section 1.337(d)-7, nor have they disposed of any such asset during their current taxable year.
18
member of an affiliated group filing a consolidated federal income Tax Return (other than the group the common parent of which was Company) nor (ii) has any liability for the Taxes of any Person (other than any IPT Holdco Subsidiary) (A) under Treasury Regulation Section 1.1502-6 (or any similar provision of state, local or foreign law), or (B) as a transferee or successor, by contract, or otherwise.
Section 3.11 Benefit Plans; Employees.
Section 3.12 Intellectual Property. To the Knowledge of Company OP, no Intellectual Property used by any IPT Holdco Subsidiary infringes or is alleged to infringe any Intellectual
19
Property rights of any third party, except as, individually or in the aggregate, would not be reasonably expected to have a Company Material Adverse Effect. To the Knowledge of Company OP, except, individually or in the aggregate, as would not be reasonably expected to have a Company Material Adverse Effect, no Person is misappropriating, infringing or otherwise violating any Intellectual Property of any IPT Holdco Subsidiary. Except as, individually or in the aggregate, would not reasonably be expected to have a Company Material Adverse Effect, each IPT Holdco Subsidiary owns or is licensed to use, or otherwise possess valid rights to use, all Intellectual Property necessary to conduct the business of the IPT Holdco Subsidiaries as it is currently conducted.
Section 3.13 Environmental Matters. Except (i) as set forth in Section 3.13 of the Company Disclosure Letter or (ii) as, individually or in the aggregate, would not reasonably be expected to have a Company Material Adverse Effect:
Notwithstanding any other provision of this Agreement, this Section 3.13 contains the exclusive representations and warranties of Company OP with respect to environmental matters, Environmental Laws or Hazardous Substances.
Section 3.14 Properties.
20
21
22
Section 3.15 Material Contracts. Except as, individually or in the aggregate, would not reasonably be expected to have a Company Material Adverse Effect, each Company Material Contract is legal, valid, binding and enforceable against the applicable IPT Holdco Subsidiary and, to the Knowledge of Company OP, each other party thereto, and is in full force and effect, except as may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar Laws affecting creditors’ rights generally and by general principles of equity (regardless of whether enforceability is considered in a proceeding in equity or at Law). Each IPT Holdco Subsidiary has performed all obligations required to be performed by it under each Company Material Contract and, to the Knowledge of Company OP, each other party thereto has performed all obligations required to be performed by it under such Company Material Contract, in each case, except as, individually or in the aggregate, would not reasonably be expected to have a Company Material Adverse Effect. No IPT Holdco Subsidiary nor, to the Knowledge of Company OP, any other party thereto, is in breach or violation of, or default under, any Company Material Contract, and no event has occurred that, with notice or lapse of time or both, would constitute a violation, breach or default under any Company Material Contract, except where in each case such violation, breach or default is not reasonably likely to have, individually or in the aggregate, a Company Material Adverse Effect. Except as, individually or in the aggregate, would not reasonably be expected to have a Company Material Adverse Effect, as of the date hereof, no IPT Holdco Subsidiary has received written notice of any material violation or material default under any Company Material Contract. Section 3.15 of the Company Disclosure Letter sets forth a true, complete and correct list of all outstanding Indebtedness of IPT Holdco Subsidiaries as of the date set forth therein, other than Indebtedness payable to another IPT Holdco Subsidiary.
Section 3.16 Insurance. The IPT Holdco Subsidiaries maintain insurance coverage with reputable insurers in such amounts and covering such risks which the IPT Holdco Subsidiaries believe are adequate for the operation of their respective businesses and the protection of their respective assets. As of the date hereof, and except as, individually or in the aggregate, would not reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect, there is no claim by any IPT Holdco Subsidiary pending under any such insurance policies that has been denied or disputed by the insurer. Except as, individually or in the aggregate, would not reasonably be expected to have a Company Material Adverse Effect, all premiums due and payable under all Company Insurance Policies have been paid, and each IPT Holdco Subsidiary has otherwise complied in all material respects with the terms and conditions of its respective Company Insurance Policies. Except as individually or in the aggregate, would not reasonably be expected to have a Company Material Adverse Effect, to the Knowledge of Company OP, such Company Insurance Policies are valid and enforceable in accordance with their terms and are in full force and effect. No written notice of cancellation or termination has been received by any IPT Holdco Subsidiary with respect to any such policy that has not been replaced on substantially similar terms prior to the date of such cancellation.
Section 3.17 Brokers. Except for the fees and expenses payable to the Persons set forth in Section 3.17 of the Company Disclosure Letter, no broker, investment banker or other Person is entitled to any broker's, finder's or other similar fee or commission in connection with the transactions contemplated by this Agreement based upon arrangements made by or on behalf of the Company, Company OP or any IPT Holdco Subsidiary.
23
Section 3.18 Related-Party Transactions. Except for or pursuant to this Agreement or as set forth in the Company SEC Documents, from January 1, 2020 through the date of this Agreement there have been no transactions, agreements, arrangements or understandings between an IPT Holdco Subsidiary, on the one hand, and any Affiliates (other than other IPT Holdco Subsidiaries) thereof, on the other hand, that would be required to be disclosed by the Company under Item 404 of Regulation S-K promulgated by the SEC.
Section 3.19 Investment Company Act. No IPT Holdco Subsidiary is required to be registered as an investment company under the Investment Company Act.
Section 3.20 No Other Representations and Warranties. Except for the representations or warranties expressly set forth in this Article 3, neither Company OP nor any other Person has made any representation or warranty, expressed or implied, with respect to Company OP or the IPT Holdco Subsidiaries, their businesses, operations, assets, liabilities, condition (financial or otherwise), results of operations, future operating or financial results, estimates, projections, forecasts, plans or prospects (including the reasonableness of the assumptions underlying such estimates, projections, forecasts, plans or prospects) or the accuracy or completeness of any information regarding Company OP or the IPT Holdco Subsidiaries. In particular, without limiting the foregoing disclaimer, except for the representations and warranties made by Company in this Article 3, neither Company nor any other Person makes or has made any representation or warranty to BCI IV Holdco or any of its Affiliates or Representatives with respect to, any oral or written information presented to BCI IV Holdco or any of its Affiliates or Representatives in the course of their due diligence of Company OP or the IPT Holdco Subsidiaries, the negotiation of this Agreement or in the course of the transactions contemplated hereby.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF BCI IV HOLDCO
BCI IV Holdco hereby represents and warrants to Company OP that:
Section 4.1 Organization and Qualification. BCI IV Holdco is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Delaware. BCI IV Holdco has the requisite organizational power and authority to own, lease, hold, encumber and operate its properties and to carry on its business as it is now being conducted and is duly qualified or licensed to do business, and is in good standing, in each jurisdiction where the character of the properties owned, operated or leased by it or the nature of its business makes such qualification, licensing or good standing necessary, except for such failures to be so qualified, licensed or in good standing that, individually or in the aggregate, would not reasonably be expected to have a BCI IV Material Adverse Effect.
Section 4.2Authority.
24
party, including the Interest Sale. The execution and delivery and performance by BCI IV Holdco of this Agreement and the consummation by BCI IV Holdco of the transactions contemplated by this Agreement have been duly and validly authorized by all necessary action on behalf of BCI IV Holdco, and no other proceedings on the part of BCI IV Holdco are necessary to authorize this Agreement or the Interest Sale or to consummate the other transactions contemplated by this Agreement. This Agreement has been duly authorized, executed and delivered by BCI IV Holdco and assuming due authorization, execution and delivery by Company OP, constitutes a legally valid and binding obligation of BCI IV Holdco, enforceable against BCI IV Holdco in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar Laws affecting creditors’ rights generally and by general principles of equity (regardless of whether enforceability is considered in a proceeding in equity or at law).
Section 4.3No Conflict; Required Filings and Consents.
25
state and local Transfer Taxes, and (iii) where failure to obtain such consents, approvals, authorizations or permits, or to make such filings or notifications, individually or in the aggregate, would not reasonably be expected to have a BCI IV Material Adverse Effect.
Section 4.4 Investment Representation. BCI IV Holdco is acquiring the IPT Holdco Interests for its own account for purposes of investment and not with a view to the distribution of its interests therein or dividing all or any part of its interest therein with any other Person. BCI IV Holdco acknowledges that the sale of the IPT Holdco Interests has not been registered under Law (including the Securities Act and any state, local or foreign securities laws) and that the IPT Holdco Interests may not be transferred without registration under, pursuant to an exemption from or in a transaction not subject to, Law.
Section 4.5Taxes.
ARTICLE 5
GENERAL PROVISIONS
Section 5.1 Nonsurvival of Representations, Warranties, Covenants and Agreements. None of the representations, warranties, covenants or agreements made by Company OP in this Agreement or in any instrument delivered by Company OP pursuant to this Agreement (including the Company Disclosure Letter), including any rights arising out of any breach of such representations, warranties, covenants or agreements, shall survive the Closing, and from and after the Closing, BCI IV Holdco shall have no recourse against, and hereby fully releases, Company OP and its Affiliates and their respective shareholders, members, partners, directors, trustees, officers, sponsors, advisors, managers, agents or other representatives (other than with respect to any actual and intentional fraud with respect to the making of any representation or warranty set forth in Article 3).
Section 5.2 Public Announcements. The Parties hereto shall consult with each other before issuing any press release or otherwise making any public statements or filings with respect to this Agreement or any of the transactions contemplated by this Agreement, and, except as otherwise permitted or required by this Agreement, none of the Parties shall issue any such press release or make any such public statement or filing prior to obtaining the other Parties’ consent (which consent shall not be unreasonably withheld, conditioned or delayed); provided that a Party may, without obtaining the other Parties’ consent, issue such press release or make
26
such public statement or filing with respect to this Agreement or any of the transactions contemplated by this Agreement as may be required by Law (including as may be required to avoid suspending an ongoing public offering), Order or the applicable rules of any stock exchange, in which case such Party shall consult with the other Party before making such public statement or filing with respect to this Agreement or any of the transactions contemplated by this Agreement, except to the extent it is not reasonably practicable to do so.
Section 5.3 Notices. All notices, requests, claims, consents, demands and other communications under this Agreement shall be in writing and delivered (i) in person, (ii) by electronic mail including a .pdf attachment (providing confirmation of transmission), or (iii) sent by prepaid overnight courier (providing proof of delivery), to the Parties at the following addresses (or at such other addresses as shall be specified by the Parties by like notice):
(a) | if to Company to: |
Industrial Property Trust
518 Seventeenth Street, 17th Floor
Denver, CO 80202
Attn:John Woodberry, Chairman of the Company Special Committee
email: john@woodberryholdings.com
with a copy (which shall not constitute notice) to:
Industrial Property Trust
518 Seventeenth Street, 17th Floor
Denver, CO 80202
Attn: |
Thomas G. McGonagle, Managing Director & Chief Financial Officer |
Joshua J. Widoff, Managing Director & Chief Legal Officer
email: tom.mcgonagle@blackcreekgroup.com
josh.widoff@blackcreekgroup.com
and to:
Hogan Lovells US LLP
555 13th Street NW
Washington, DC 20004
Attn:David Bonser
Stacey McEvoy
email: david.bonser@hoganlovells.com
stacey.mcevoy@hoganlovells.com
BCI IV Portfolio Real Estate Holdco LLC
518 Seventeenth Street, 17th Floor,
27
Denver, CO 80202
Attn:Charles B. Duke, Chairman of the BCI IV Special Committee
email: charlesbduke@gmail.com
with a copy (which shall not constitute notice) to:
DLA Piper US LLP
4141 Parklake Avenue, Suite 300
Raleigh, NC 27612-2350
Attn:Robert Bergdolt
email: rob.bergdolt@dlapiper.com
All notices, requests, claims, consents, demands and other communications under this Agreement shall be deemed duly given or made (A) if delivered in person, on the date delivered,
Section 5.4 Severability. If any term or other provision of this Agreement is found by a court of competent jurisdiction to be invalid, illegal or incapable of being enforced under any present or future Law or public policy in any jurisdiction, as to that jurisdiction, (a) such term or other provision shall be fully separable, (b) this Agreement shall be construed and enforced as if such invalid, illegal or unenforceable provision had never comprised a part hereof, (c) all other conditions and provisions of this Agreement shall remain in full force and effect and shall not be affected by the illegal, invalid or unenforceable term or other provision or by its severance herefrom so long as the economic or legal substance of the transactions contemplated by this Agreement is not affected in any manner materially adverse to any Party, and (d) such terms or other provision shall not affect the validity or enforceability of any of the terms or provisions of this Agreement in any other jurisdiction. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced in any jurisdiction, the Parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible in a mutually acceptable manner in order that transactions contemplated by this Agreement be consummated as originally contemplated to the fullest extent possible.
Section 5.5 Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original and all of which together shall be deemed one and the same agreement, and shall become effective when one or more counterparts have been signed by each of the Parties and delivered to the other Parties. Signatures to this Agreement transmitted by electronic mail in .pdf format, or by any other electronic means intended to preserve the original graphic and pictorial appearance of a document, will have the same effect as physical delivery of the paper document bearing the original signature.
Section 5.6 Entire Agreement; No Third-Party Beneficiaries. This Agreement constitutes the entire agreement and supersedes all prior agreements and understandings, both
28
written and oral, among the Parties, or between any of them, with respect to the subject matter of this Agreement. This Agreement is not intended to and shall not confer any rights or remedies upon any Person other than the Parties and their respective successors and permitted assigns, except for the provisions of Section 2.7 (which, from and after the Closing Date, shall be for the benefit of, and may be enforced by, IPT Liquidator LLC). The representations and warranties in this Agreement are the product of negotiations between the Parties and are for the sole benefit of the Parties. The representations and warranties in this Agreement may represent an allocation among the Parties of risks associated with particular matters regardless of the knowledge of any of the Parties. Accordingly, persons other than the Parties may not rely upon the representations and warranties in this Agreement as characterizations of actual facts or circumstances as of the date of this Agreement or as of any other date.
Section 5.7 Amendment. Subject to compliance with applicable Law, this Agreement may be amended by mutual agreement of the Parties hereto by action taken or authorized by the Company Board (with the prior approval and recommendation of the Company Special Committee) and the BCI IV Board (with the prior approval and recommendation of the BCI IV Special Committee), respectively. This Agreement may not be amended except by an instrument in writing signed by each of the Parties.
Section 5.8 Governing Law. This Agreement, and all Actions (whether at Law, in contract or in tort) that may be based upon, arise out of or related to this Agreement or the negotiation, execution or performance of this Agreement, shall be governed by, and construed in accordance with, the laws of the State of Maryland without giving effect to any choice or conflicts of Law principles (whether of the State of Maryland or any other jurisdiction) that would cause the application of the Laws of any jurisdiction other than the State of Maryland.
Section 5.9 Consent to Jurisdiction. Each Party irrevocably agrees and consents (a) to submit itself to the exclusive jurisdiction of the Circuit Court for Baltimore City (Maryland), and to request assignment to the Business and Technology Case Management Program (the “Maryland Court”) for the purpose of any Action (whether based on contract, tort or otherwise), directly or indirectly, arising out of or relating to this Agreement or the transactions contemplated by this Agreement or the actions of the Parties in the negotiation, administration, performance and enforcement of this Agreement, (b) that it will not attempt to deny or defeat such jurisdiction by motion or other request for leave from any such court, (c) that it waives any objection to the laying of venue of any Action in the Maryland Court and agrees not to plead or claim in the Maryland Court that such litigation brought therein has been brought in any inconvenient forum, (d) that it will not bring any Action relating to this Agreement or the transactions contemplated by this Agreement or the actions of the parties hereto in the negotiation, administration, performance and enforcement of this Agreement in any court other than the Maryland Court, and (e) that a final judgment in any Action shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by Law. Each Party hereby irrevocably and unconditionally agrees to request and/or consent to the assignment of any Action to the Maryland Court’s Business and Technology Case Management Program. Nothing in this Agreement shall limit or affect the rights of any Party to pursue appeals from any judgments or order of the Maryland Court as provided by Law. Each Party agrees, (x) to the extent such Party is not otherwise subject to service of process in the State of
29
Maryland, to appoint and maintain an agent in the State of Maryland as such Party’s agent for acceptance of legal process, and (y) that service of process may also be made on such Party by prepaid certified mail with a proof of mailing receipt validated by the United States Postal Service constituting evidence of valid service. Service made pursuant to clauses (x) or (y) above shall have the same legal force and effect as if served upon such Party personally within the State of Maryland.
Section 5.10 Assignment. Neither this Agreement nor any of the rights, interests or obligations under this Agreement shall be assigned or delegated, in whole or in part, by operation of Law or otherwise by any of the Parties without the prior written consent of the other Parties, and any attempt to make any such assignment without such consent shall be null and void. Subject to the preceding sentence, this Agreement will be binding upon, inure to the benefit of, and be enforceable by, the Parties and their respective successors and assigns.
Section 5.11 Remedies. Except as otherwise provided in this Agreement, any and all remedies herein expressly conferred upon a Party will be deemed cumulative with and not exclusive of any other remedy conferred hereby, or by Law or equity upon such Party, and the exercise by a Party of any one remedy will not preclude the exercise of any other remedy.
Section 5.12 Waiver of Jury Trial. EACH PARTY HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY SUIT, ACTION OR OTHER PROCEEDING (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. EACH PARTY (A) CERTIFIES THAT NO REPRESENTATIVE OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH PARTY WOULD NOT, IN THE EVENT OF ANY ACTION, SUIT OR PROCEEDING, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT, BY, AMONG OTHER THINGS, THE MUTUAL WAIVER AND CERTIFICATIONS IN THIS SECTION 6.11.
Section 5.13 Authorship. The Parties agree that the terms and language of this Agreement are the result of negotiations among the Parties and their respective advisors and, as a result, there shall be no presumption that any ambiguities in this Agreement shall be resolved against any Party. Any controversy over construction of this Agreement shall be decided without regard to events of authorship or negotiation.
30
IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed and delivered by their respective duly authorized officers, all as of the date first written above.
BCI IV PORTFOLIO REAL ESTATE HOLDCO LLC
By: BCI IV Operating Partnership LP, its sole member
By: Black Creek Industrial REIT IV Inc., its general partner
By: /s/ JEFFREY W. TAYLOR
Name: Jeffrey W. Taylor
Title: Managing Director, Co-President
INDUSTRIAL PROPERTY OPERATING PARTNERSHIP LP
By: Industrial Property Trust, its general partner
By: /s/ THOMAS G. MCGONAGLE
Name: Thomas G. McGonagle
Title: Chief Financial Officer
Exhibit 10.2
AMENDMENT NO. 1 TO
AMENDED AND RESTATED ADVISORY AGREEMENT (2020)
THIS AMENDMENT NO. 1 TO AMENDED AND RESTATED ADVISORY AGREEMENT (2020) (this “Amendment”), dated and effective as of July 15, 2020, is entered into by and among Black Creek Industrial REIT IV Inc., a Maryland corporation (the “Corporation”), BCI IV Operating Partnership LP, a Delaware limited partnership (the “Operating Partnership”), and BCI IV Advisors LLC, a Delaware limited liability company (the “Advisor”). The Corporation, the Operating Partnership and the Advisor are collectively referred to in this Amendment as the “Parties.” Capitalized terms used but not defined herein shall have the meanings ascribed to such terms in the Advisory Agreement (as defined below).
WHEREAS, the Parties entered into that certain Amended and Restated Advisory Agreement (2020) (the “Advisory Agreement”), dated as of June 12, 2020, pursuant to which the Advisor agreed to provide certain services to the Company; and
WHEREAS, the Parties desire to enter into this Amendment to provide that the Advisor shall receive a fee for rendering services related to the development, construction, improvement or stabilization of certain Real Property or overseeing the provision of these services by third parties.
NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereto agree as follows:
(b) Development Fee. The Advisor shall receive a Development Fee (defined below) with respect to each Real Property for which the Advisor provides Development Services (defined below) or Development Oversight Services (defined below), either in connection with the acquisition of such Real Property (including, without limitation, forward commitment acquisitions), the stabilization of such Real Property (including, without limitation, development or value add transactions), or both (any of the foregoing being “Development Real Properties”). In connection with providing services related to the development, construction, improvement or stabilization, including tenant improvements, of Development Real Properties (collectively, “Development Services”) or overseeing the provision of these services by third parties on behalf of the Corporation (“Development Oversight Services”), the fee (the “Development Fee”) will be an amount that will equal up to 4.0% of Total Project Cost of such Development Real Property (or the Corporation’s proportional interest therein with respect to Real Property held in Joint Ventures or other entities that are co-owned). If the Advisor engages a third party to provide Development Services directly to the Corporation, the third party shall be compensated directly by the Corporation, and the Advisor shall receive the Development Fee if it provides the Development Oversight Services. The total of all Development Fees and Acquisition Expenses paid by the Corporation with respect to any Real Property shall not exceed 6%
of the Contract Purchase Price or the Total Project Cost (as applicable) of such Real Property unless Development Fees in excess of such amount are approved by a majority of the Board of Directors, including a majority of the Independent Directors.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date and year first above written.
|
|
|
BLACK CREEK INDUSTRIAL REIT IV INC. |
||
|
|
|
By: |
|
/s/ Jeff Taylor |
Name: |
|
Jeffrey Taylor |
Title: |
|
Managing Director, Co-President |
|
||
BCI IV OPERATING PARTNERSHIP LP |
||
|
||
By: Black Creek Industrial REIT IV Inc., its Sole General Partner |
||
|
|
|
By: |
|
/s/ Jeff Taylor |
Name: |
|
Jeffrey Taylor |
Title: |
|
Managing Director, Co-President |
|
||
BCI IV ADVISORS LLC |
||
|
||
By: BCI IV Advisors Group LLC, its Sole Member |
||
|
|
|
By: |
|
/s/ Evan H. Zucker |
Name: |
|
Evan H. Zucker |
Title: |
|
Manager |
|
|
|
Exhibit 10.3
FOURTH AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP
OF
BUILD-TO-CORE INDUSTRIAL PARTNERSHIP I LP
TABLE OF CONTENTS
|
|
||
|
Page |
||
ARTICLE 1 AFFIRMATION, NAME, PLACE OF BUSINESS, TERM, AND PARTNERS |
2 |
||
1.1 Formation of Partnership; Certificate of Limited Partnership. |
2 |
||
1.2 Name and Offices |
3 |
||
1.3 Term |
3 |
||
1.4 Registered Office and Agent |
3 |
||
1.5 Certificate of Limited Partnership |
3 |
||
1.6 Partners |
3 |
||
ARTICLE 2 PURPOSES AND OBJECTIVES |
4 |
||
2.1 Purposes |
4 |
||
2.2 Overview |
4 |
||
2.3 Financing |
4 |
||
ARTICLE 3 EXECUTIVE COMMITTEE |
5 |
||
3.1 Composition |
5 |
||
3.2 Role of Executive Committee |
5 |
||
3.3 Meetings |
6 |
||
ARTICLE 4 INVESTMENTS; CAPITAL CONTRIBUTIONS |
7 |
||
4.1 Identification Period; Investment Period; Process for Investments; Diligence; Recommendation and Approval |
7 |
||
4.2 Percentage Interests; Interests |
8 |
||
4.3 Capital Contributions |
8 |
||
4.4 Treatment of Defaulting Partner |
11 |
||
4.5 Capital Accounts |
13 |
||
4.6 No Interest on, or Right to Return of Capital Contributions or Capital Account |
13 |
||
4.7 Cash Contributions |
13 |
||
ARTICLE 5 DISTRIBUTIONS AND ALLOCATIONS |
13 |
||
5.1 Defined Terms |
14 |
||
5.2 Distributions |
14 |
||
5.3 Carried Interest Amounts |
14 |
||
5.4 Timing of Distributions |
14 |
||
5.5 Allocations |
14 |
||
5.6 No Violations |
14 |
||
5.7 Withholding |
14 |
||
ARTICLE 6 MANAGEMENT AND EXPENSES |
16 |
||
6.1 Management |
16 |
||
6.2 Restrictions on Authority of the General Partner |
18 |
||
6.3 Duties and Obligations of the General Partner |
18 |
||
6.4 Fees; Expenses |
24 |
||
6.5 Permitted Other Activities |
25 |
||
6.6 Presentation of Investments |
25 |
||
6.7 Limitations on Liability; Indemnification |
25 |
||
6.8 Designation of Tax Matters Partner |
27 |
||
6.9 Prohibited Payments |
29 |
||
ARTICLE 7 WITHDRAWAL AND REMOVAL OF GENERAL PARTNER |
29 |
||
7.1 Voluntary Withdrawal |
29 |
||
7.2 Bankruptcy or Dissolution of the General Partner |
29 |
||
7.3 Liability of Withdrawn General Partner |
30 |
||
7.4 Removal of General Partner for Cause |
30 |
||
ARTICLE 8 TRANSFER OF INTERESTS |
30 |
||
8.1 Assignments |
30 |
||
8.2 Admission of Assignees as Substituted Partners |
37 |
||
ARTICLE 9 BUY-SELL; FORCED SALE; DISPUTE RESOLUTION |
38 |
||
9.1 Buy-Sell. |
38 |
||
9.2 Forced Sale |
42 |
||
9.3 Specific Performance |
48 |
i
9.4 Dispute Resolution |
48 |
||
ARTICLE 10 DISSOLUTION AND LIQUIDATION OF THE PARTNERSHIP |
49 |
||
10.1 Events Causing Dissolution |
49 |
||
10.2 Liquidation |
50 |
||
ARTICLE 11 BOOKS AND RECORDS, ACCOUNTING, REPORTS, TAX ELECTIONS, ETC. |
51 |
||
11.1 Books and Records |
51 |
||
11.2 Accounting and Fiscal Year |
52 |
||
11.3 Bank Accounts and Investment |
52 |
||
11.4 Tax Depreciation and Elections |
52 |
||
11.5 Interim Closing of the Books |
53 |
||
11.6 Information from the Limited Partners and the Special Limited Partner |
53 |
||
ARTICLE 12 MISCELLANEOUS |
53 |
||
12.1 Remedies |
53 |
||
12.2 Notice |
53 |
||
12.3 Appointment of General Partner as Attorney-in-Fact |
53 |
||
12.4 Amendments |
54 |
||
12.5 Entire Agreement |
54 |
||
12.6 Successors |
55 |
||
12.7 Representations and Warranties of the General Partner |
55 |
||
12.8 Representations and Warranties of the Limited Partners and the Special Limited Partner |
55 |
||
12.9 Meaning of Certain Terms |
58 |
||
12.10 Counterparts |
58 |
||
12.11 Confidentiality |
58 |
||
12.12 Applicable Law |
60 |
||
12.13 Waiver of Jury Trial |
60 |
||
12.14 Venue |
60 |
||
12.15 Limitation on Benefits |
60 |
ii
Definitions
The following capitalized terms used in this Agreement are defined in the sections indicated below:
|
|
A&R Date |
Recitals |
A&R Partnership Agreement |
Recitals |
Acceptance Notice |
Section 9.1(a)(ii) |
Acquisition Date |
Section 2.2(b)(i) |
Act |
Recitals |
Affiliate |
Section 12.9 |
Agreement |
Introduction |
Allocable Share |
Section 8.1(c)(i) |
Applicable Information |
Section 12.11(b)(iii) |
Applicable Vehicles |
Section 6.6(b) |
Appraisal Date |
Section 6.3(e)(i) |
Appraisal Notice |
Section 6.3(e)(iii) |
Appraised Value |
Section 6.3(e)(vi) |
Appraisers |
Section 6.3(e)(iv) |
Approval of the Executive Committee |
Section 3.2 |
Approved |
Section 3.2 |
Approved Investment |
Section 4.1(b) |
Approved Partnership Budget |
Section 6.2(c) |
Arbitration Notice |
Section 9.4 |
BCIMC |
Section 12.11(b)(iii) |
BCIMC College |
Introduction |
BCIMC Hydro |
Introduction |
BCIMC International Real Estate |
Recitals |
BCIMC Limited Partner |
Introduction |
BCIMC Municipal |
Introduction |
BCIMC Parties |
Section 12.11(b)(iv) |
BCIMC Public Service |
Introduction |
BCIMC Representative |
Section 3.1 |
BCIMC Teachers |
Introduction |
BCIMC USA |
Recitals |
BCIMC WCB |
Introduction |
BCIMC WCBAF |
Introduction |
Benefit Plan Investor |
Section 12.8(k) |
BTC Intermediate Portfolio Holdco |
Section 2.2(c) |
BTC Portfolio Holdco |
Section 2.2(c) |
Business Day |
Section 3.3(b) |
Buy-Sell |
Section 9.1(a)(i) |
Buy-Sell Closing Period |
Section 9.1(d)(i) |
Buy-Sell Deposit |
Section 9.1(c) |
Buy-Sell Notice |
Section 9.1(a)(i) |
Buy-Sell Price |
Section 9.1(a)(ii) |
Calculation Date |
Section 5.1(a) |
iii
Capital Account |
Section 4.5 |
Capital Call Funding Period |
Section 4.3(d) |
Capital Call Notice |
Section 4.3(d) |
Capital Commitment |
Section 4.3(e) |
Capital Contributions |
Section 4.3(a) |
Carried Interest Amounts |
Section 5.1(b) |
Carried Interest Distributions |
Section 5.1(c) |
Cash Available for Distribution |
Section 5.1(d) |
Cause |
Section 7.4(a) |
Cause Notice |
Section 7.4(b) |
Certificate of Limited Partnership |
Recitals |
Closing Period |
Section 8.1(c)(ii)(A) |
Code |
Section 2.2(c) |
Confidential Information |
Section 12.11(a) |
Contributing Partner |
Section 4.4(b) |
Control |
Section 12.9 |
Core Investment |
Section 2.2(b)(ii) |
CPR |
Section 7.4(b) |
Cumulative 6.5% Internal Rate of Return Amount |
Section 5.1(e) |
Cumulative 8.5% Internal Rate of Return Amount |
Section 5.1(f) |
Cure Date |
Section 4.4(c) |
Dallas Portfolio |
Section 5.1(g) |
Dallas Portfolio Cash Available for Distribution |
Section 5.1(h) |
Deadlock Event |
Section 3.2 |
Default Date |
Section 4.4(c) |
Default Period |
Section 4.4(c) |
Defaulting Partner |
Section 4.4(a) |
Deposit |
Section 8.1(c)(ii) |
Development Investment |
Section 2.2(b)(iii) |
Disputed Issue |
Section 7.4(b) |
Due Care |
Section 6.3(a) |
EC Indemnitee |
Section 6.7(c) |
Election Period |
Section 9.2(b)(i) |
Eligibility Requirements |
Section 8.1(b) |
Embargoed Person |
Section 12.8(m) |
ERISA |
Section 12.8(k) |
Executive Committee |
Section 3.1 |
Executive Officer |
Section 7.4(a)(iv) |
Exemption |
Section 5.7(b) |
Final Adjustment |
Section 6.8(d)(ii) |
Fiscal Year |
Section 11.2 |
Force Majeure Event |
Section 7.4(a)(ii) |
Forced Sale |
Section 9.2(a)(i) |
Forced Sale Notice |
Section 9.2(a)(ii) |
Formation Date |
Recitals |
iv
General Partner |
Introduction |
General Partner Carried Interest Amount |
Section 5.1(i) |
General Partner Carried Interest Amount Deficiency |
Section 5.3(a)(ii) |
GP Appraiser |
Section 6.3(e)(ii) |
GP Fees |
Section 6.4(a) |
GP Indemnitee |
Section 6.7(b) |
Guaranty |
Section 6.4(d) |
Guaranty Fee |
Section 6.4(d) |
Identification Period |
Section 4.1(a) |
IIT |
Section 6.1 |
Indebtedness |
Section 2.2(b) (iv) |
Indemnitee |
Section 6.7(c) |
Independent Appraiser |
Section 6.3(e)(iii) |
Independent Appraiser Appointment Period |
Section 6.3(e)(ii) |
Initial Budget Approval |
Section 6.3(b)(i) |
Initial Capital Contributions |
Section 4.3(a) |
Initial Investment Brief |
Section 4.1(c) |
Initial Partnership Agreement |
Recitals |
Initiator |
Section 9.2(a)(ii) |
Interest |
Section 4.2(b) |
Investment |
Section 2.2(b)(v) |
Investment Advisers Act |
Section 12.8(g) |
Investment Company Act |
Section 12.8(f) |
Investment Entity |
Section 2.2(c) |
Investment Memorandum |
Section 4.1(c) |
Investment Period |
Section 4.1(a) |
IPT |
Introduction |
IPT Advisors |
Introduction |
IPT Advisors Group |
Introduction |
IPT Board |
Section 7.4(a)(vi) |
IPT Change of Control |
Section 7.4(a)(vi) |
IPT HoldCo |
Introduction |
IPT Limited Partner |
Introduction |
IPT OpCo |
Introduction |
IPT Partners |
Introduction |
IPT REIT Listing Transaction |
Section 7.4(a)(vi) |
IPT Sell-Down |
Section 8.1(e) |
IRS |
Section 6.8(b) |
Judicial Review |
Section 6.8(c) |
Key Persons |
Section 6.1 |
Key Person Event |
Section 6.1 |
Leverage Targets |
Section 2.3 |
Limited Partner |
Introduction |
Limited Partner Capital Call |
Section 4.3(d) |
Limited Partner Funding Request |
Section 4.3(d) |
Limited Partners |
Introduction |
v
Losses |
Section 6.7(b) |
LP Appraiser |
Section 6.3(e)(iii) |
LP Appraiser Appointment Period |
Section 6.3(e)(ii) |
LP Appraiser Notice |
Section 6.3(e)(iii) |
LP Indemnitee |
Section 6.7(c) |
Major Decision |
Section 6.2 |
Marketing Period |
Section 9.2(b)(iii) |
Material Adverse Effect |
Section 7.4(a)(i) |
Non-Transfer Option |
Section 8.1(d)(ii) |
OFAC |
Section 12.8(l) |
Offer |
Section 8.1(c)(i) |
Offer Period |
Section 8.1(c)(i) |
Offer Price |
Section 8.1(c)(i) |
Offered Price |
Section 9.1(a)(ii) |
Offeree Partners |
Section 8.1(c)(i) |
Offering Partner |
Section 8.1(c)(i) |
Operating Agreement |
Section 2.2(c) |
Oversight Party |
Section 7.4(b) |
Partner |
Introduction |
Partners |
Introduction |
Partnership |
Introduction |
Partnership Expenses |
Section 6.4(c) |
Partnership Leverage Target |
Section 2.3 |
Partnership Tax Audit Rules |
Section 5.7(a) |
PBSA |
Section 12.11(b)(i) |
Percentage Interests |
Section 4.2(a) |
Person |
Section 12.9 |
Pipeline Investment |
Section 6.6(a) |
Pipeline Screening Notice |
Section 6.6(a) |
Portfolio |
Section 2.2(a)(i) |
Portfolio Appraisal |
Section 6.3(e)(ii) |
Portfolio Value |
Section 6.3(e)(iv) |
Post-Stabilization Leverage Target |
Section 2.3 |
Pre-Stabilization Leverage Target |
Section 2.3 |
Preservation Costs |
Section 4.3(c)(v) |
Primary Markets |
Section 2.2(a)(i) |
Proposed Investments |
Section 4.1(b) |
Proposed Portfolio Price |
Section 9.2(a)(ii) |
Proposed Purchase Price |
Section 9.2(b)(iv)(A) |
Purchasing Partner |
Section 9.1(a)(ii) |
QFPF Certification |
Section 5.7(d)(i) |
Qualified Appraiser |
Section 6.3(e)(i) |
Qualified Institutional Transferee |
Section 8.1(b)(v) |
Recipients |
Section 9.2(a)(ii) |
Redemption |
Section 5.3(b)(i) |
Redemption Closing Date |
Section 5.3(b)(iii) |
vi
Redemption Note |
Section 5.3(b)(ii) |
Redemption Price |
Section 5.3(b)(i) |
Redemption Price Deficiency |
Section 5.3(b)(ii) |
Regulated Company |
Section 2.2(h) |
Regulated Share |
Section 2.2(h) |
Removal Date Value |
Section 7.4(c) |
Representative |
Section 3.1 |
Requesting Partner |
Section 7.4(b) |
Required Representation |
Section 8.1(c)(ii)(A) |
Responding Partner |
Section 9.1(a)(i) |
Response Period |
Section 9.1(a)(ii) |
ROFO Acceptance Notice |
Section 8.1(c)(i) |
ROFO Closing Period |
Section 9.2(b)(ii) |
ROFO Deposit |
Section 9.2(b)(ii) |
ROFO Election |
Section 9.2(b)(ii) |
ROFO Price |
Section 9.2(a)(ii) |
ROFO Sale |
Section 9.2(b)(i) |
ROFR Notice |
Section 9.2(b)(iv)(A) |
ROFR Closing Period |
Section 9.2(b)(iv)(B) |
ROFR Election |
Section 9.2(b)(iv)(A) |
ROFR Exercise Period |
Section 9.2(b)(iv)(A) |
ROFR Notice |
Section 9.2(b)(iv)(A) |
ROFR Price |
Section 9.2(b)(iv)(A) |
ROFR Sale |
Section 9.2(b)(iv)(A) |
SEC |
Section 9.1(a)(iii) |
Second A&R Partnership Agreement |
Recitals |
Securities Act |
Section 12.8(d) |
Sell-Down Transferee |
Section 8.1(e) |
Selling Partner |
Section 9.1(a)(ii) |
Senior Preferred Equity Contributions |
Section 4.4(b)(ii) |
Senior Preferred Return |
Section 4.4(b)(ii) |
Special Limited Partner |
Introduction |
Special Limited Partner Carried Interest Amount |
Section 5.1(j) |
Stabilization |
Section 2.3 |
Strategic Land Investment |
Section 6.2(a) |
Substitute General Partner List |
Section 7.4(d) |
Supporting Materials |
Section 6.3(b) |
Tag Along Notice |
Section 8.1(d)(i) |
Tag Along Offer Terms |
Section 8.1(d)(i) |
Tag Along Option |
Section 8.1(d)(ii) |
Tag Along Purchaser |
Section 8.1(d)(i) |
Tag Along Transfer |
Section 8.1(d) |
Tax Audit |
Section 6.8(c) |
Tax Matters Partner |
Section 6.8(a) |
Term |
Section 1.3 |
Third A&R Partnership Agreement |
Recitals |
vii
Transfer |
Section 8.1(a) |
Transferee |
Section 8.1(a) |
Treaty |
Section 5.7(d)(i) |
Trigger Date |
Section 8.1(b) |
Triggering Partner |
Section 9.1(a)(i) |
Unfunded Amount |
Section 4.4(a) |
Unlevered LP Capital Contributions |
Section 5.1(k) |
Unlevered LP Distributions |
Section 5.1(l) |
Unrelated Third Party |
Section 12.9 |
Value-Add Investment |
Section 2.2(b)(vi) |
Willful Bad Acts |
Section 7.4(a)(v) |
viii
Schedules and Exhibits
Schedule 1Names, Addresses, Percentage Interests of Partners
Exhibit ACapital Accounts; Allocation Rules
Exhibit BPrimary Markets
Exhibit CTarget Investment Characteristics
Exhibit DGP Fees
Exhibit ESubstitute General Partner List
Exhibit FCPR Arbitration
Exhibit GForm of Investment Entity Operating Agreement
Exhibit HReporting Requirements
Exhibit IObjectives
Exhibit JCertain Defined Terms and Distributions
Exhibit KRestrictions on Authority
Exhibit LPresentation of Investments
Exhibit MCause
Exhibit NForm of QFPF Certification
ix
FOURTH AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF
Build-To-Core Industrial Partnership I LP
THIS FOURTH AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP (this “Agreement”) of Build-To-Core Industrial Partnership I LP, a Delaware limited partnership (the “Partnership”) is made and entered into as of December 30, 2016, by and among: (a) IPT BTC I GP LLC, a Delaware limited liability company, as general partner (the “General Partner”), which is a subsidiary of IPT Real Estate Holdco LLC, a Delaware limited liability company (“IPT HoldCo”), which in turn is a subsidiary of Industrial Property Operating Partnership LP (“IPT OpCo”), which in turn is a subsidiary of Industrial Property Trust Inc. (“IPT”); (b) IPT BTC I LP LLC, a Delaware limited liability company, which is a subsidiary of IPT HoldCo, which in turn is a subsidiary of IPT OpCo, which in turn is a subsidiary of IPT, as a limited partner (the “IPT Limited Partner” and, together with the General Partner, collectively, the “IPT Partners”); (c) Industrial Property Advisors Sub I LLC, a Delaware limited liability company (the “Special Limited Partner”), which is a subsidiary of Industrial Property Advisors LLC (“IPT Advisors”), which in turn is a subsidiary of Industrial Property Advisors Group LLC (“IPT Advisors Group”), as a limited partner; (d) bcIMC (WCBAF) Realpool Global Investment Corporation, a Canadian corporation, as a limited partner (“BCIMC WCBAF”); (e) bcIMC (College) US Realty Inc., a Canadian corporation, as a limited partner (“BCIMC College”); (f) bcIMC (Municipal) US Realty Inc., a Canadian corporation, as a limited partner (“BCIMC Municipal”); (g) bcIMC (Public Service) US Realty Inc., a Canadian corporation, as a limited partner (“BCIMC Public Service”); (h) bcIMC (Teachers) US Realty Inc., a Canadian corporation, as a limited partner (“BCIMC Teachers”); (i) bcIMC (WCB) US Realty Inc., a Canadian corporation, as a limited partner (“BCIMC WCB”); and (j) bcIMC (Hydro) US Realty Inc., a Canadian corporation, as a limited partner (“BCIMC Hydro” and, together with BCIMC WCBAF, BCIMC College, BCIMC Municipal, BCIMC Public Service, BCIMC Teachers and BCIMC WCB, collectively, the “BCIMC Limited Partner”). BCIMC WCBAF, BCIMC College, BCIMC Municipal, BCIMC Public Service, BCIMC Teachers, BCIMC WCB, BCIMC Hydro and the IPT Limited Partner shall each be referred to herein individually as a “Limited Partner” and collectively as the “Limited Partners” and the Limited Partners, the Special Limited Partner and the General Partner, each shall be referred to herein individually as a “Partner” and collectively as the “Partners.”
RECITALS
WHEREAS, on November 19, 2014 (the “Formation Date”), the General Partner executed a Certificate of Limited Partnership (the “Certificate of Limited Partnership”) forming the Partnership as a limited partnership under the Delaware Revised Uniform Limited Partnership Act (6 Del. C. §§ 17-101 et seq.) (as amended from time to time, the “Act”) and filed such certificate among the partnership records of the State of Delaware on the Formation Date;
WHEREAS, the initial partners of the Partnership entered into that certain Limited Partnership Agreement of the Partnership, dated as of the Formation Date (the “Initial Partnership Agreement”);
WHEREAS, each of the General Partner, the IPT Limited Partner, bcIMC International Real Estate (2004) Investment Corporation (“BCIMC International Real Estate”) and BCIMC WCBAF amended and restated the Initial Partnership Agreement pursuant to that certain Amended and Restated Agreement of Limited Partnership of the Partnership (the “A&R Partnership Agreement”), dated as of February 12, 2015 (the “A&R Date”);
WHEREAS, each of the General Partner, the IPT Limited Partner, BCIMC International Real Estate, BCIMC WCBAF and bcIMC (USA) Realty Div A2 LLC (“BCIMC USA”) amended and
restated the A&R Partnership Agreement pursuant to that certain Second Amended and Restated Agreement of Limited Partnership of the Partnership, dated as of January 28, 2016 (as amended pursuant to that certain Amendment No. 1 to Partnership Agreement, dated as of May 17, 2016, the “Second A&R Partnership Agreement”);
WHEREAS, each of the General Partner, the IPT Limited Partner, the Special Limited Partner, BCIMC International Real Estate, BCIMC WCBAF and BCIMC USA amended and restated the Second A&R Partnership Agreement pursuant to that certain Third Amended and Restated Agreement of the Partnership, dated as of September 15, 2016 (the “Third A&R Partnership Agreement”), pursuant to which, among other things, the Special Limited Partner became entitled to (i) the direct payment by the Partnership of certain GP Fees and (ii) the Special Limited Partner Carried Interest Amount;
WHEREAS, prior to the execution and delivery of this Agreement (A) pursuant to an Assignment and Assumption Agreement, dated as of December 29, 2016, BCIMC International Real Estate sold, transferred, assigned, conveyed and delivered to: (i) BCIMC College a portion of BCIMC International Real Estate’s Interest equal to a 1.972152% Percentage Interest in the Partnership;
(ii) BCIMC Municipal a portion of BCIMC International Real Estate’s Interest equal to a 17.209584% Percentage Interest in the Partnership; (iii) BCIMC Public Service a portion of BCIMC International Real Estate’s Interest equal to a 9.966992% Percentage Interest in the Partnership;
WHEREAS, the Partners desire to effect the following: (i) the amendment and restatement of the Third A&R Partnership Agreement; (ii) the admission of each of BCIMC College, BCIMC Municipal, BCIMC Public Service, BCIMC Teachers, BCIMC WCB and BCIMC Hydro as a limited partner of the Partnership; and (iii) the continuation of the Partnership on the terms set forth herein.
NOW, THEREFORE, for and in consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are acknowledged hereby, the Partners agree as follows:
ARTICLE 1
AFFIRMATION, NAME, PLACE OF BUSINESS, TERM, AND PARTNERS
1.1 | Formation of Partnership; Certificate of Limited Partnership. The Partners hereby: |
2
(b) | confirm and agree to their status as partners of the Partnership; and |
1.6 | Partners. |
3
Office of Foreign Assets Control as a “specially designated or blocked person” or (ii) described in Section 1 of U.S. Executive Order 13224 issued on September 23, 2001.
ARTICLE 2
PURPOSES AND OBJECTIVES
4
five percent (85%) of the rentable space of such Investment has been leased to tenants under leases for which the lease commencement date has occurred, such tenants have taken occupancy of their premises and have commenced base rent payments. Consistent with Section 2.2(i), except as otherwise approved by the BCIMC Limited Partner, at no time shall any financing result in or be permitted where the BCIMC Limited Partner is required to provide security for such financing and/or provide any collateral, covenants, guarantees, security or assignments in respect thereof or otherwise incur any debt obligation.
ARTICLE 3
EXECUTIVE COMMITTEE
5
or safety emergencies without the Approval of the Executive Committee. Any Major Decision requiring the Approval of the Executive Committee that is proposed by any Representative but is not Approved or deemed Approved shall constitute a “Deadlock Event”.
(24) hours’ notice and if the Representative that was not present fails to attend such second meeting or is not appointed, such meeting may nevertheless take place and the Representative that was not present shall be deemed to have voted in favor of any such Major Decision proposed at such subsequently held meeting.
6
equipment by means of which all Persons participating in the meeting may talk with and hear one another.
ARTICLE 4
INVESTMENTS; CAPITAL CONTRIBUTIONS
7
8
9
year pursuant to this Section 4.3(c)(vi)(A) with respect to any Investment Entity shall not exceed, in the aggregate, the threshold described in Section 6.2(d)(i); and (B) a variance from the Approved Partnership Budget in the aggregate amount of all capital expenditures incurred by any Investment Entity in any calendar year; provided, that the aggregate amount of all Capital Contributions that can be made in any calendar year pursuant to this Section 4.3(c)(vi)(B) with respect to any Investment Entity shall not exceed, in the aggregate, the threshold described in Section 6.2(d)(ii), it being understood that, the General Partner shall have no obligation on behalf of the Partnership or otherwise, to cause an Investment Entity to continue to prosecute work or incur expenditures for which the Partners are not required to make or have not otherwise agreed to make Capital Contributions in respect of any such variances and the General Partner shall have no liability with respect to the incurrence of any such variances;
10
Approved a Major Decision to the contrary, under no circumstances will any Partner be obligated to (i) make Capital Contributions which, when aggregated with all its prior Capital Contributions, exceeds the amount set forth as its “Capital Commitment” on Schedule 1 (with respect to each Partner, the “Capital Commitment”) or (ii) make Capital Contributions after the expiration of the Investment Period in respect of any Proposed Investment not Approved by the Executive Committee on or before the expiration of the Investment Period.
11
For purposes of this Section 4.4(b), if more than one Contributing Partner elects to make a Senior Preferred Equity Contribution pursuant to clause (ii) above and/or to make an additional Capital Contribution pursuant to clause (iii) above, such Contributing Partners will fund their pro rata share, based on relative Percentage Interests, of such Senior Preferred Equity Contribution and/or Capital Contribution, as applicable, in an aggregate collective amount equal to the Unfunded Amount. If only one Contributing Partner elects to make a Senior Preferred Equity Contribution or an additional Capital Contribution, the electing Contributing Partner shall fund the Senior Preferred Equity Contribution or Capital Contribution, as applicable, in the entire amount of the Unfunded Amount.
12
ARTICLE 5
DISTRIBUTIONS AND ALLOCATIONS
13
5.4 | Timing of Distributions. |
5.7 | Withholding. |
14
provisions and any similar provision of state or local tax laws (the “Partnership Tax Audit Rules”), the amount withheld shall be treated as a distribution to that Partner in the amount of the withholding. In the event of any claimed over-withholding, Partners shall be limited to an action against the applicable jurisdiction, and not against the Partnership. If the amount withheld or required to be withheld (including under the Partnership Tax Audit Rules) was not withheld from actual distributions, the Partnership may, at its option, (i) require the Partner to reimburse the Partnership for such withholding or (ii) reduce any subsequent distributions by the amount of such withholding. Each Partner agrees to furnish the Partnership with any representations and forms as shall reasonably be requested by the Partnership to assist it in determining the extent of, and in fulfilling, its withholding obligations. Each Partner will indemnify the General Partner and the Partnership against any losses and liabilities (including, without limitation, interest and penalties) related to any withholding obligations with respect to allocations or distributions made to it by the Partnership other than amounts resulting from the Partnership’s failure to timely pay over any amounts withheld or to timely file any returns.
15
ARTICLE 6
MANAGEMENT AND EXPENSES
16
Zucker or Scott Recknor (on a permanent or interim basis), or (y) any other individual who does so devote his/her time, subject to the approval of the BCIMC Limited Partner (which shall not be unreasonably withheld, conditioned or delayed if the proposed replacement has substantially similar or greater experience in acquiring and managing industrial properties in the United States as Dwight Merriman). If the IPT Partners fail to designate a permitted or approved replacement Key Person within sixty (60) days after a Key Person Event, the Investment Period shall be deemed to have expired.
(II) provisions of the Code or the Treasury Regulations relating to taxation of partners and partnerships and real estate investment trusts, including, without limitation, any changes thereto.
17
Limited Partner hereby consents to the exercise by the General Partner of the powers conferred on it by this Agreement, subject to the restrictions and limitations set forth in this Agreement or the Act.
18
19
20
necessary to allow the Executive Committee to make an informed decision about the draft budget, including historical and expected operating revenues and expenses and historical and expected capital expenditures and projected operating income and expenses and capital expenditures for any Investments and Approved Investments (collectively, the “Supporting Materials”). The General Partner shall provide any additional information reasonably requested by any Representative in connection with the budget review process promptly following such request and the Executive Committee shall have reasonable access during normal business hours of the General Partner to the General Partner’s management personnel to obtain and discuss such information. No less than fifteen (15) Business Days after delivery of the draft annual budget described above (or such other date Approved by the Executive Committee), the General Partner shall call a meeting of the Executive Committee for the purpose of considering and approving such draft annual budget (the “Initial Budget Approval”). Within ten (10) Business Days after the Initial Budget Approval, the General Partner shall prepare and submit to the Executive Committee, for its consideration and approval as a Major Decision pursuant to Section 6.2(c), a full Partnership budget by adding the initial budget approval partnership level expenses such as general and administrative expenses and GP Fees and shall set a date for a meeting of the Executive Committee for the purpose of considering and approving such draft annual budget, with the objective of finalizing the Approved Partnership Budget no later than December 31. The General Partner shall consider in good faith, but without any obligation to make, any suggested changes and adjustments to the draft annual budget proposed by any Representative (other than changes that are inconsistent with the manner in which GP Fees are computed in accordance with Exhibit D), and if any changes are made by the General Partner to the draft annual budget prior to its approval, the General Partner shall submit a revised annual budget to the Executive Committee for its consideration and approval as a Major Decision pursuant to Section 6.2(c), together with any new, additional or updated Supporting Materials (not previously provided) that are reasonably necessary for the Executive Committee to make an informed decision about the revised draft annual budget. If the Executive Committee rejects the draft annual budget for any calendar year that is submitted to it for approval as a Major Decision pursuant to Section 6.2(c), then not later than fifteen (15) Business Days after such rejection, the General Partner shall prepare and submit to the Executive Committee, for its consideration and approval as a Major Decision pursuant to Section 6.2(c), either the same or a revised draft of the annual budget for such year, incorporating any such changes the General Partner elects to make based upon its good faith consideration of any feedback and comments provided on the prior draft annual budget by a Representative to the General Partner (other than changes that are inconsistent with the manner in which GP Fees are computed in accordance with Exhibit D). Upon the Approval of the full draft budget by the Executive Committee pursuant to Section 6.2(c), such budget shall become the Approved Partnership Budget for all purposes under this Agreement and shall supersede any prior Approved Partnership Budget; provided, however, if the Representatives are unable to agree on an annual budget, the prior year’s Approved Partnership Budget shall continue in effect (save and except in respect of non- recurring line items), adjusted by uncontrollable costs (such as, insurance, taxes and utilities), inflation and the requirements of tenant leases entered into by the Investment Entities. The failure of the Executive Committee to Approve two (2) consecutive annual budgets within the time periods set forth in this Section 6.3(b)(i) shall be deemed to be a Deadlock Event.
21
incur the obligations set forth in, and otherwise implement, the then Approved Partnership Budget.
22
Notice”) to the General Partner electing to (x) agree to the Portfolio Appraisal or (y) reject the Portfolio Appraisal. In the event the BCIMC Limited Partner rejects the Portfolio Appraisal, the BCIMC Limited Partner shall select, approve and appoint a Qualified Appraiser to value the entire Portfolio (by aggregating the value of each Investment) as of the effective date of the General Partner’s proposed Portfolio Appraisal (the “LP Appraiser”) within five (5) Business Days following the General Partner’s receipt of the Appraisal Notice (the “LP Appraiser Appointment Period”) by providing notice to the General Partner of such appointment (the “LP Appraiser Notice”). If the BCIMC Limited Partner fails to appoint the LP Appraiser within the LP Appraiser Appointment Period, the Portfolio Appraisal shall be conclusive on the Partners. If both the GP Appraiser and the LP Appraiser are appointed, then the GP Appraiser and the LP Appraiser shall thereafter appoint a third (3rd) Qualified Appraiser (the “Independent Appraiser” and, together with the GP Appraiser and the LP Appraiser, collectively, the “Appraisers”) and give notice thereof to the Partners within ten (10) days following the General Partner’s receipt of the LP Appraiser Notice (the “Independent Appraiser Appointment Period”). If the GP Appraiser and the LP Appraiser fail to appoint the Independent Appraiser within the Independent Appraiser Appointment Period, any Partner (other than the Special Limited Partner) may petition a court of competent jurisdiction to appoint the Independent Appraiser.
23
Partnership for the Partnership’s interest in such Investment shall, for all purposes of this Agreement, be deemed to be its value established pursuant to this Section 6.3(e) until such time as such Investment is appraised in accordance with this Section 6.3.
24
Sell-Down Transferee requires similar REIT services and structural considerations, in which case, such costs and expenses shall be borne by the Partnership.
Subject to Section 6.6, any Partner may engage independently or with others in other business ventures of every nature and description. Except as otherwise expressly provided herein, nothing in this Agreement shall be deemed to prohibit any Affiliate of a Partner from dealing, or otherwise engaging in business, with Persons transacting business with the Partnership or an Investment Entity or from providing services relating to the purchase, sale, financing, management, development, operation, leasing or disposition of industrial-type facilities and receiving compensation therefor, even if competitive with the business of the Partnership or the Investment Entities. Except to the extent provided for under this Agreement, no Partner shall have any right by virtue of this Agreement or the relationship created hereby in or to such other ventures or activities or to the income or proceeds derived therefrom, even if competitive with the business of the Partnership hereunder or any of the Investment Entities.
The Partners have set forth certain terms relating to the presentation of Investments in Exhibit L, which is incorporated by reference and attached hereto; all references herein to Section shall be referred to Exhibit L.
25
26
27
otherwise approved by the Partners, such approval not to be unreasonably withheld, conditioned or delayed. Each Partner hereby (i) approves of the General Partner’s authority to make such designation and (ii) agrees to execute, certify, acknowledge, deliver, swear to, file and record at the appropriate public offices such documents as may be deemed necessary or appropriate to evidence such designation.
authorized:
28
ARTICLE 7
WITHDRAWAL AND REMOVAL OF GENERAL PARTNER
(90) | days in advance of such withdrawal. |
29
to be the general partner of the Partnership and its Interest shall terminate; provided, however, that such termination shall not affect any rights or liabilities of the General Partner which matured prior to such event, or the value, if any, at the time of such event of the Interest of the General Partner.
ARTICLE 8
TRANSFER OF INTERESTS
8.1 | Assignments. |
(i) | no Transfer of any Interest may be made if, in the opinion of legal |
30
counsel to the Partnership, such assignment would require filing of a registration statement under the Securities Act or would otherwise violate any Federal or state securities or Blue Sky laws (including any investment suitability standards) or regulations applicable to the Partnership or the Interests;
$1,000,000,000, and (z) is not the subject of a bankruptcy proceeding or (II) an entity that is otherwise a Qualified Institutional Transferee under clauses (A), (B) or (C) above acts as the general partner, managing member or fund manager and at least fifty percent (50%) of the equity interests in such investment vehicle are owned, directly or indirectly, by one or more Persons that are otherwise Qualified Institutional Transferees under clauses (A), (B) or (C) above (each of the foregoing, a “Qualified Institutional Transferee”);
As used herein, “Eligibility Requirements” shall mean with respect to any Person, that (x) such Person has total assets (in name, under management or advisement and/or pursuant to undrawn, binding, irrevocable capital commitments) in excess of $1,000,000,000 and (except with respect to a pension advisory firm, registered investment advisor or asset manager) capital/statutory surplus,
31
shareholder’s equity and/or undrawn, binding, irrevocable capital commitments of at least
$250,000,000 and (y) such Person is regularly engaged in the business of making or owning (or, in the case of a pension advisory firm, registered investment advisor, asset manager or similar fiduciary, regularly engaged in managing investments in) debt or equity interests relating to commercial real estate.
In addition, subject to Sections 8.1(c) and (d), at any time following the Trigger Date, upon receipt of prior written approval thereof by the BCIMC Limited Partner (such approval not to be unreasonably withheld, conditioned or delayed, provided, that it shall be deemed reasonable to take into consideration factors other than financial capability), the General Partner may, on its own behalf and on behalf of the IPT Limited Partner, Transfer all of the Interests held by the General Partner and the IPT Limited Partner in the Partnership to a Qualified Institutional Transferee, in which event the provisions of Article 7 shall apply governing substitution of the General Partner and transition of its duties and responsibilities to a substitute general partner of the Partnership.
(A) | Closing Date. The closing of the sale of Interests to the Offeree Partner(s) pursuant to this Section 8.1(c) shall be held on the date mutually selected by the Offeree Partner(s) that is no later than sixty (60) days after the delivery of the ROFO Acceptance Notice (the “Closing Period”). The closing shall be completed through a customary closing escrow, and the Offer Price shall be paid by wire transfer of immediately available federal funds. The closing of the sale of Interests to the Offeree Partner(s) pursuant to this Section 8.1(c) shall be on an “as is” and “where is” basis with no representations or warranties other than a representation from the Offering Partner that (A) it owns the Interest being |
32
transferred free and clear of all liens, claims and encumbrances other than permitted liens, claims or encumbrances that were deducted in determining the applicable price of the Interest and liens, claims and encumbrances securing indebtedness of the Partnership or an Investment Entity, (B) it has full right and authority to sell such Interest and that the sale has been duly authorized, (C) the assignment document has been duly authorized, executed and delivered, (D) the consummation of the transactions contemplated thereby will not violate the terms of any agreement to which the Offering Partner is a party, or any order, judgment, or decree applicable to the Offering Partner and (E) no consent, approval, or authorization of or designation, declaration, or filing with any governmental authority or other Person is required on the part of the Offering Partner in connection with the consummation of the transactions contemplated hereby or, if required, has been obtained (clauses (A) - (E), the “Required Representations”).
(B) | Required Documents. Prior to or at the closing of the sale of Interests to the Offeree Partner(s) pursuant to this Section 8.1(c), the Offering Partner shall supply to the Offeree Partner(s) all documents customarily required (or reasonably required by the Offeree Partner(s)) to make a good and sufficient conveyance of such Interest to the Offeree Partner(s), which documents shall be in form and substance reasonably satisfactory to the Offeree Partner(s) and the Offering Partner. |
(C) | Conditions Precedent to Closing. The obligation of the Offeree Partner(s) to pay the purchase price in connection with a sale of Interests pursuant to this Section 8.1(c) shall be conditioned upon the Interest being transferred free and clear of all liens, claims and encumbrances, other than permitted liens, claims and encumbrances that were waived by the Offeree Partner(s) and deducted in determining the applicable price of the Interest and permitted liens, claims and encumbrances securing indebtedness of the Partnership or the Investment Entities. This condition is for the sole benefit of the Offeree Partner(s) and may be waived by the Offeree Partner(s) in whole or in part in each of their sole discretion. |
(D) | Brokerage. No brokerage fees or commissions shall be payable by the Partnership in connection with any purchase pursuant to this Section 8.1(c), and each Partner shall indemnify and hold harmless the Partnership and the other Partners from and against any such claims made based upon the actions of such Partner, including any fees and expenses in defending any such claims. |
33
(iii) | In connection with any sale made pursuant to this Section 8.1(c): |
(A) | the Offeree Partner(s) shall pay all fees and costs customarily paid by purchasers of companies that own and operate real property in each jurisdiction where the Investments are located (which may include title fees, recording costs, recording and transfer taxes, as applicable); |
(B) | the Offering Partner shall pay all fees and costs customarily paid by sellers of companies that own and operate real property in each jurisdiction in which the Investments are located (which may include title fees, recording costs, recording and transfer taxes, as applicable); |
(C) | the Offering Partner and the Offeree Partner(s) each shall pay its own legal fees; and |
(D) | the Offeree Partner(s) and the Offering Partner shall adjust the purchase price to reflect all adjustments customarily made in connection with the sale of companies that own and operate real estate in each jurisdiction in which the Investments are located (which may include the proration and apportionment of any revenues and expenses of the Investments). |
In the event of a dispute with respect to any of the adjustments and prorations to be made pursuant to this Section 8.1(c)(iii), each of the purchasing Offeree Partner(s) and the Offering Partner shall submit to an arbitration pursuant to Section 9.4 of this Agreement. The arbitrator shall be limited to awarding only one or the other of the two adjustment proposals submitted. The decision of the arbitrator shall be final and binding on the purchasing Offeree Partner(s) and the Offering Partner.
34
35
the Offering Partner in its reasonable discretion until such indebtedness or obligations are released).
(i) the purchase price for the Offering Partner’s Interest divided by the Offering Partner’s Percentage Interest multiplied by (ii) the Offeree Partner’s Percentage Interest. Notwithstanding the foregoing, the aggregate reasonable and customary expenses of the Partners incurred in connection with the transfer of their Interests (including, without limitation, any reasonable attorneys’ fees and expenses and any brokerage fees) shall be paid (or reimbursed) out of the aggregate purchase price paid to the transferring Partners.
(v) If an Offeree Partner shall exercise the Tag Along Option, such Offeree Partner shall take all actions reasonably necessary to cause its Interest to be transferred to the Tag Along Purchaser, such actions to include, without limitation, executing a contract of sale if requested to do so by the Tag Along Purchaser (which
36
contract shall be commercially reasonable and no more onerous to such Offeree Partner than the contract of sale executed by the Offering Partner) and complying with the terms thereof.
8.2 | Admission of Assignees as Substituted Partners. |
37
Agreement, as the same may have been amended, and executed a power of attorney similar to the power of attorney granted in this Agreement; and
8. A purported assignment of an Interest not in accordance with the provisions of this Article 8 shall not be given effect for any purpose.
ARTICLE 9
BUY-SELL; FORCED SALE; DISPUTE RESOLUTION
9.1 | Buy-Sell. |
(a) | Process. |
38
Portfolio proposed by the Triggering Partner (the “Offered Price”). Until the date which is ninety (90) days after receipt of an Buy-Sell Notice (the “Response Period”), the Responding Partners may deliver a written notice which shall be irrevocable to the Triggering Partner after electing either to (A) accept the offer to sell its Interest (an “Acceptance Notice”) to the Triggering Partner for a price applicable to the Responding Partner’s Interest based on distributions that would be made pursuant to Section 10.2 (after giving effect to all applicable provisions of this Agreement, but after liquidating all reserves then existing and without establishing any additional reserves) if the Portfolio was sold on the date of the Buy-Sell Notice for the Offered Price and all liabilities and obligations of the Partnership and any Investment Entity (excluding contingent liabilities) were satisfied from the proceeds from such sale (upon such election to sell, a Responding Partner shall be deemed a “Selling Partner” and such applicable price shall be deemed the “Buy-Sell Price”) or (B) elect to buy the Interest of the Triggering Partner for a price applicable to the Triggering Partner’s Interest based on distributions that would be made pursuant to Section 10.2 (after giving effect to all applicable provisions of this Agreement, but after liquidating all reserves then existing and without establishing any additional reserves) if the Portfolio was sold on the date of the Buy-Sell Notice for the Offered Price and all liabilities and obligations of the Partnership and any Investment Entity (excluding contingent liabilities) were satisfied from the proceeds from such sale (upon such election to buy, a Responding Partner shall be deemed a “Purchasing Partner” and such applicable price shall be deemed the “Buy-Sell Price”); provided, that if one Responding Partner elects to buy the Interest of the Triggering Partner and the other Responding Partner elects to sell its Interest to the Triggering Partner, the Responding Partner electing to buy the Interest of the Triggering Partner shall also be required to buy the Interest of the other Responding Partner at the price applicable to such Responding Partner’s Interest (which shall be deemed the “Buy-Sell Price”). A failure to respond during the Response Period shall be deemed to constitute an election to sell. If more than one Purchasing Partner shall have elected to buy the Interest of the Triggering Partner, then the Interest of the Triggering Partner shall be allocated among such Purchasing Partners in proportion to their respective Allocable Share at the time of such purchase.
39
(d) | Closing. |
40
the Investments are located (which may include title fees, recording costs, recording and transfer taxes, as applicable);
In the event of a dispute with respect to any of the adjustments and prorations to be made pursuant to this Section 9.1(f), each of the Purchasing Partner(s) and the Selling Partner(s) shall submit to an shall submit to an arbitration pursuant to Section 9.4 of this Agreement. The arbitrator shall be limited to awarding only one or the other of the two adjustment proposals submitted. The decision of the arbitrator shall be final and binding on the Purchasing Partner(s) and the Selling Partner(s).
41
Selling Partner(s) shall not under any circumstances be entitled to (x) issue a Buy-Sell Notice, (y) have any rights to initiate a Buy-Sell pursuant to this Section 9.1 or (z) have any rights to initiate a Forced Sale pursuant to Section 9.2.
(a) | Process. |
42
authorizing the General Partner to execute on behalf of the Partnership and the Investment Entities all documents and instruments necessary to consummate the sale of the Portfolio and assets of the Partnership and the Investment Entities in accordance with the provisions of this Section 9.2. Upon the sale of the Portfolio and assets of the Partnership and the Investment Entities, the Partnership shall be dissolved in accordance with Section 10.1.
(b) | Right of First Offer; Right of First Refusal. |
(iv) | ROFR. |
(A) | If (x) the Recipient(s) fail to timely and properly make a ROFO Election or deliver the ROFO Deposit, and (y) the Initiator subsequently, within the Marketing Period, executes a letter of intent (binding, subject to the Recipient(s)’ rights under this paragraph, or non-binding) for the acquisition of the applicable assets to be sold pursuant to the Forced Sale Notice, and (z) such letter of intent has a proposed cash |
43
purchase price of less than ninety-eight percent (98%) of the Proposed Portfolio Price, the Initiator shall not enter into a binding contract with the proposed purchaser or any of its Affiliates unless the Initiator shall provide written notice (the “ROFR Notice”) to the Recipient(s) of (1) the proposed cash purchase price (the “Proposed Purchase Price”) under such letter of intent, (2) a statement setting forth the amount which would be distributed to the Initiator pursuant to Section 5.2 above (after giving effect to all applicable provisions of this Agreement, but after liquidating all reserves then existing and without establishing any additional reserves) if all of the property to be sold as identified in the ROFR Notice were sold on the date of such notice for a gross sales price equal to the Proposed Purchase Price and all liabilities and obligations of the Partnership and any Investment Entity (excluding contingent liabilities) were satisfied from the proceeds from such sales price, and any remaining proceeds were distributed to the Partners in accordance with Section 5.2 (the “ROFR Price”) and (3) the other material economic terms of such sale set forth in such letter of intent. Within twenty-one (21) days after receipt of the ROFR Notice (the “ROFR Exercise Period”), the Recipient shall have the right to offer to purchase all of the Interest of the Initiator to be sold at the ROFR Price and the other applicable terms set forth in the ROFR Notice (the “ROFR Sale”), by giving written notice of such election within the ROFR Exercise Period (the “ROFR Election”), which offer shall be irrevocable, and delivering to a title company or other agent reasonably designated by Initiator, in escrow, a cash deposit equal to five percent (5%) of the ROFR Price (the “ROFR Deposit”), which deposit shall be applied against the ROFR Price at closing and shall be nonrefundable to the Recipient(s) (except in the event of a material default of the Initiator in performing its closing obligations pursuant to Section 9.2(c)).
(B) | If the Recipient(s) have timely and properly made a ROFR Election and delivered the ROFR Deposit, the Initiator and the Recipient(s) (or their respective designees) shall consummate the ROFR Sale on an “as is” and “where is” basis with no representations or warranties (other than the Required Representations from the Initiator) within thirty |
(30) days after the date such Initiator’s acceptance is received by the Recipient(s) (the “ROFR Closing Period”).
(C) | If the Recipient(s) do not timely or properly make a ROFR Election or fail to deliver the ROFR Deposit in accordance with clause (A) above, (x) the Recipient(s) shall be deemed to have elected not to purchase the Interest to be sold pursuant to the applicable ROFR Notice and (y) the Initiator shall be free to, in accordance with Section 9.2(d) below, cause the Partnership to enter into the Forced Sale with the party |
44
executing the letter of intent (or any of its Affiliates or assigns), within sixty (60) days after the expiration of the ROFR Exercise Period at a price which is not less than the Proposed Purchase Price, and otherwise on such terms as set forth in the letter of intent.
(c) | Terms Applicable to a ROFO Sale/ROFR Sale. |
(A) | the Recipient(s) shall pay all fees and costs customarily paid by purchasers of companies that own and operate real property in each jurisdiction where the Investments are located (which may include title fees, recording costs, recording and transfer taxes, as applicable); |
(B) | the Initiator shall pay all fees and costs customarily paid by sellers of companies that own and operate real property in each jurisdiction in which the Investments are located (which may include title fees, recording costs, recording and transfer taxes, as applicable); |
(C) | the Initiator and the Recipient(s) each shall pay its own legal fees; and |
(D) | the Recipient(s) and the Initiator shall adjust the purchase price to reflect all adjustments customarily made in |
45
connection with the sale of companies that own and operate real estate in each jurisdiction in which the Investments are located (which may include the proration and apportionment of any revenues and expenses of the Investments).
In the event of a dispute with respect to any of the adjustments and prorations to be made pursuant to this Section 9.2(c)(iv), each of the Initiator and the Recipient(s) shall submit to an shall submit to an arbitration pursuant to Section 9.4 of this Agreement. The arbitrator shall be limited to awarding only one or the other of the two adjustment proposals submitted. The decision of the arbitrator shall be final and binding on the Initiator and the Recipient(s).
46
thereafter the sale contemplated thereby fails to close within the ROFO Closing Period or ROFR Closing Period, as applicable, as a result of a default of the Initiator (which default is not cured within ten (10) days following the occurrence thereof), then the Initiator shall be in material default hereunder and the Recipient(s) shall have the right to either (1) seek specific performance from the Initiator in respect of such sale, or (2) elect not to close, in which event the Initiator shall return the ROFO Deposit or ROFR Deposit, as applicable, to the Recipient(s), the Initiator shall pay to the Recipient(s) an amount equal to the ROFO Deposit or ROFR Deposit, as applicable, and the Initiator shall reimburse the Recipient(s) for the reasonable third-party, out-of-pocket costs actually incurred and paid by the Recipient(s) in connection with exercising the relevant ROFO Election or ROFR Election. Further, thereafter, the Initiator shall (x) cease to have any rights to initiate a Buy-Sell pursuant to Section 9.1, (y) not under any circumstances be entitled to make a ROFO Election or ROFR Election and (z) cease to have any rights to initiate a Forced Sale pursuant to Section 9.2(a).
(d) | Terms Applicable to Forced Sale. |
47
Recipient(s) (excluding disproportionate impacts solely due to having different ownership interests) and (C) the right, without further limitation, at any time or from time to time, to discontinue its pursuit of a Forced Sale (reserving the right to recommence the sales process at any time pursuant to the terms of this Section 9.2), and the Initiator shall not have any obligations or liability to the Recipient(s) by reason of such abandonment. If the Initiator is the BCIMC Limited Partner, (I) the Initiator and the Recipient(s) shall co-control the sale process, (II) Initiator shall give reasonably prior notice to the Recipient(s) of any material actions proposed to be taken with respect to such sale process, (III) the Initiator shall provide the Recipient(s) with all communications made or received by a third party with respect to such sale process and (IV) the Initiator shall not take any action that the Recipient(s) determines, acting in good faith, would result in a reduction in the value of the Partnership, any Investment Entity or the Portfolio or would make the assets of the Partnership or the Investment Entities or the Portfolio less marketable.
48
there is (x) a Disputed Issue at any time, (y) a Deadlock Event prior to the Trigger Date, in each case, with respect to the Partnership or an Investment Entity (as applicable) or (z) a dispute in connection with Section 8.1(c)(iii), Section 9.1(f) or Section 9.2(c)(iv), any Limited Partner may, by delivering written notice (an “Arbitration Notice”) to the other within thirty (30) days after the occurrence of such Disputed Issue, Deadlock Event or dispute in connection with Section 8.1(c)(ii), Section 9.1(f), or Section 9.2(c)(iv), trigger the provisions outlined in Exhibit F attached hereto.
ARTICLE 10
DISSOLUTION AND LIQUIDATION OF THE PARTNERSHIP
(i) | the bankruptcy of the Partnership; |
49
of the event that caused the last remaining limited partner to cease to be a limited partner; or
(vii) | the expiration of the Term. |
Dissolution of the Partnership shall be effective on the day on which the event occurs giving rise to the dissolution. The Partnership shall not terminate until the assets of the Partnership shall have been liquidated as provided in Section 10.2 and all proceeds therefrom have been collected. Notwithstanding the dissolution of the Partnership, prior to the termination of the Partnership, as aforesaid, the business of the Partnership and the affairs of the Partners as such, shall continue to be governed by this Agreement.
(i) | to the payment of the expenses of the liquidation; |
50
in-kind distributions except if otherwise Approved by the Executive Committee. At least ten (10) Business Days prior to any proposed in-kind distribution of assets, the General Partner shall notify the Limited Partners and the Special Limited Partner that it intends to make such a distribution, which notice shall specify the assets intended to be included within such distribution. The valuation of any assets proposed to be distributed in-kind must be approved by Approval of the Executive Committee.
ARTICLE 11
BOOKS AND RECORDS, ACCOUNTING, REPORTS, TAX ELECTIONS, ETC.
(c) | Reports. |
51
payments (which shall be shown separately) made by each Limited Partner pursuant to this Agreement and the amounts paid to each Limited Partner through the end of the quarter (showing both the return on, and the return of, capital), and such other information set forth on Exhibit H attached hereto. The report issued following the last fiscal quarter of each calendar year, which report shall cover such year in its entirety, shall have been audited by an independent certified public accounting firm selected by the General Partner and Approved by the Executive Committee to the extent required by Section 6.2.
52
ARTICLE 12
MISCELLANEOUS
12.1 Remedies. If any one or more of the provisions, covenants and/or agreements set forth in this Agreement shall have been breached by any party hereto, the party or parties entitled to the benefit of such covenants or agreements may avail themselves of the express remedies set forth in this Agreement or any other remedy available pursuant to law or equity with respect to such breaches. No single or partial assertion or exercise of any such right, power or remedy of a party hereunder shall preclude any other or further assertion or exercise thereof. Notwithstanding anything to the contrary in this Agreement (including, without limitation, the provisions of Sections
6.7 and 6.8), no Person shall be entitled to recover (or be indemnified for) any Losses which are special, punitive, indirect, or consequential in nature.
53
on behalf of the Partnership, and shall survive, and not be affected by, the subsequent bankruptcy, death, incapacity, disability, adjudication of incompetence or insanity or dissolution of any Person hereby giving such power and the transfer or assignment of all or any part of the Interest of such Person; provided, however, that in the event of a permitted transfer by a Limited Partner or the Special Limited Partner of all of its Interest, the foregoing power of attorney of a transferor Partner shall survive such transfer only until such time as the transferee shall have been admitted to the Partnership as a substituted Partner and all required documents and instruments shall have been duly executed, filed and recorded to effect such substitution.
54
arrangements or understandings with respect thereto.
55
amended (the “Securities Act”), or any state or non-United States securities laws, and are being offered and sold in reliance upon United States federal, state and applicable non-United States exemptions from registration requirements for transactions not involving a public offering. Such Partner recognizes that reliance upon such exemptions is based in part upon the representations of such Partner contained in this Agreement. Such Partner represents and warrants that the Interests will be acquired by such Partner solely for the account of such Partner, for investment purposes only and not with a view to the distribution thereof. Such Partner represents and warrants that such Partner (i) is a sophisticated investor with the knowledge and experience in business and financial matters to enable such Partner to evaluate the merits and risks of an investment in the Partnership,
(ii) | is able to bear the economic risk and lack of liquidity of an investment in the Partnership and |
(iii) | is able to bear the risk of loss of its entire investment in the Partnership. |
56
that is not password protected) or broadcast over television or radio or (ii) any seminar or meeting whose attendees were invited by any general solicitation or general advertising.
C.F.R. § 2510.3-101, as modified by Section 3(42) of ERISA, to include “plan assets” of any “employee benefit plan” subject to ERISA or “plan” subject to Code §4975 (each of (i) through (iii), a “Benefit Plan Investor”). Such Partner represents, warrants and covenants that it shall not become a Benefit Plan Investor for so long as it holds Interests.
§999(a)(3), in effect at the time of such contribution or payment. Such Partner acknowledges and agrees that, notwithstanding anything to the contrary contained in this Agreement, to the extent required by any anti-money laundering law or regulation or by OFAC, the Partnership and the General Partner may prohibit additional capital contributions, restrict distributions or take any other reasonably necessary or advisable action with respect to the Interests, and such Partner shall have no claim, and shall not pursue any claim, against the Partnership, the General Partner or any other Person in connection therewith.
57
times. The term “Embargoed Person” means any Person or government subject to trade restrictions under U.S. law, including but not limited to, the International Emergency Economic Powers Act, 50 U.S.C. §1701 et seq., The Trading with the Enemy Act, 50 U.S.C. App. 1 et seq., and any Executive Orders or regulations promulgated thereunder with the result that the investment in such Person or government is prohibited by law or such Person or government is in violation of law.
58
circulated to the public through no fault of the disclosing Partner; (iii) the Confidential Information was known on a non-confidential basis prior to its disclosure in connection with this Agreement; (iv) the information was independently developed without reference to the Confidential Information; or
(v) the disclosure of the Confidential Information is required by applicable law or regulation (including, without limitation, United States securities laws); provided, that any Person to whom the Confidential Information is disclosed or delivered by a Partner pursuant to clause (i) above shall have been advised of the confidential nature of such information by the disclosing Partner and the disclosing Partner shall be responsible for any breach of this Section 12.10 by such Person. Each Partner shall be entitled to make a public announcement regarding the consummation of the acquisition, disposition or financing of an Investment; provided, that such public announcement shall not include the name or any other information that may reveal the identity of the BCIMC Limited Partner or any Affiliate of the BCIMC Limited Partner, including its ultimate parent company, without the prior written consent of the BCIMC Limited Partner (except to the extent such disclosure is required by applicable law or regulation (including, without limitation, United States securities laws)).
(b) | BCIMC Specific Confidentiality Provisions. |
(A) the name of the Partnership, (B) the date of the Partnership’s inception, (C) each of BCIMC College’s, BCIMC Municipal’s, BCIMC Public Service’s, BCIMC Teachers’, BCIMC WCB’s and BCIMC Hydro’s total capital contributions to the Partnership, and (D) the total distributions to each of BCIMC College, BCIMC Municipal, BCIMC Public Service, BCIMC Teachers, BCIMC WCB and BCIMC Hydro from the Partnership. Except to the extent otherwise required pursuant to this Section 12.11(b)(ii), each of BCIMC College, BCIMC Municipal, BCIMC Public Service, BCIMC Teachers, BCIMC WCB and BCIMC Hydro shall remain subject to such confidentiality restrictions as set forth in this Section 12.11.
59
Partner in the Partnership; and (C) a brief description of the Partnership’s general investment strategy (which will be limited to the information set forth in Article 2 hereof); provided, that with respect to any such information that has been independently produced by the BCIMC Limited Partner, including based on information provided by the General Partner, the BCIMC Limited Partner agrees to include language stating, or otherwise disclosing, that such information has been independently prepared by the BCIMC Limited Partner.
60
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.
GENERAL PARTNER
IPT BTC I GP LLC, a Delaware limited liability company
By: IPT Real Estate Holdco LLC, a Delaware limited liability company, its sole member
By: Industrial Property Operating Partnership LP, a Delaware limited partnership, its sole member
By: Industrial Property Trust Inc., a Maryland corporation, its general partner
By: /s/ THOMAS G. MCGONAGLE
Name: Thomas G. McGonagle
Title: Chief Financial Officer
IPT LIMITED PARTNER
IPT BTC I LP LLC, a Delaware limited liability company
By: IPT Real Estate Holdco LLC, a Delaware limited liability company, its sole member
By: Industrial Property Operating Partnership LP, a Delaware limited partnership, its sole member
By: Industrial Property Trust Inc., a Maryland corporation, its general partner
By: /s/ THOMAS G. MCGONAGLE
Name: Thomas G. McGonagle
Title: Chief Financial Officer
SPECIAL LIMITED PARTNER
Industrial Property Advisors Sub I LLC, PT BTC I LP LLC, a Delaware limited liability company
By: Industrial Property Advisors LLC, a Delaware limited liability company, its sole member
By: Industrial Property Advisors Group LLC, a Delaware limited liability company, its sole member
By: /s/ EVAN H. ZUCKER
Name: Evan H. Zucker
Title: Manager
BCIMC WCBAF
bcIMC (WCBAF) Realpool Global Investment Corporation, a Canadian corporation
By: /s/ JONATHAN DUBOIS-PHILLIPS
Name: Jonathan Dubois-Phillips
Title: President
BCIMC COLLEGE
bcIMC (College) US Realty Inc., a Canadian corporation
By: /s/ JONATHAN DUBOIS-PHILLIPS
Name: Jonathan Dubois-Phillips
Title: President
BCIMC MUNICIPAL
bcIMC (Municipal) US Realty Inc., a Canadian corporation
By: /s/ JONATHAN DUBOIS-PHILLIPS
Name: Jonathan Dubois-Phillips
Title: President
BCIMC PUBLIC SERVICE
bcIMC (Public Service) US Realty Inc., a Canadian corporation
By: /s/ JONATHAN DUBOIS-PHILLIPS
Name: Jonathan Dubois-Phillips
Title: President
BCIMC TEACHERS
bcIMC (Teachers) US Realty Inc., a Canadian corporation
By: /s/ JONATHAN DUBOIS-PHILLIPS
Name: Jonathan Dubois-Phillips
Title: President
BCIMC WCB
bcIMC (WCB) US Realty Inc., a Canadian corporation
By: /s/ JONATHAN DUBOIS-PHILLIPS
Name: Jonathan Dubois-Phillips
Title: President
BCIMC HYDRO
bcIMC (Hydro) US Realty Inc., a Canadian corporation
By: /s/ JONATHAN DUBOIS-PHILLIPS
Name: Jonathan Dubois-Phillips
Title: President
Exhibit 10.4
FIRST AMENDMENT TO
FOURTH AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF BUILD-TO-CORE INDUSTRIAL PARTNERSHIP I LP
THIS FIRST AMENDMENT (this “Amendment”) to the Fourth Amended and Restated Agreement of Limited Partnership of Build-to-Core Industrial Partnership I LP, a Delaware limited partnership (the “Partnership”), in entered into as of July 15, 2020 by IPT BTC I GP LLC, a Delaware limited liability company, in its capacity as general partner of the Partnership (the “General Partner”).
W I T N E S S E T H
WHEREAS, the Partners executed and agreed to the terms set forth in that certain Fourth Amended and Restated Agreement of Limited Partnership of the Partnership, dated as of December 30, 2016 (the “Partnership Agreement”);
WHEREAS, the General Partner is a subsidiary of IPT Real Estate Holdco LLC (“IPT HoldCo”), which in turn is a subsidiary of Industrial Property Operating Partnership LP (“IPT OpCo”), which in turn is a subsidiary of Industrial Property Trust (“IPT”);
WHEREAS, it is proposed that IPT OpCo would sell to BCI IV Portfolio Real Estate Holdco LLC (“BCI IV HoldCo”) all of its interests in IPT Holdco, which sale would include all of the indirect interests of IPT in the Partnership (such sale, the “Interest Sale”);
WHEREAS, BCI IV HoldCo is a subsidiary of BCI IV Operating Partnership LP (“BCI IV OpCo”), which in turn is a subsidiary of Black Creek Industrial REIT IV Inc. (“BCI IV”);
WHEREAS, the Interest Sale is a permitted transfer under the terms of the Partnership Agreement;
WHEREAS, in connection with the Interest Sale, and pursuant to its authority set forth in Section 12.4(b)(i) of the Partnership Agreement to unilaterally amend the Partnership Agreement to make changes of a ministerial nature which do not materially or adversely affect the rights of the Limited Partners or the Special Limited Partner, the General Partner desires to amend the Partnership Agreement to reflect the new indirect ownership structure of the Partnership resulting from the Interest Sale; and
WHEREAS, the Executive Committee of the Partnership has consented to and approved this Amendment and authorized the General Partner to execute and adopt this Amendment.
NOW, THEREFORE, for and in consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are acknowledged
hereby, the Partnership hereby agrees to adopt the following amendments to the Partnership Agreement:
a. | All references in the Partnership Agreement to “IPT” (including in the name of any defined terms) are hereby deleted in their entirety and replaced with “BCI IV.” |
b. | All references in the Partnership Agreement to “IPT OpCo” are hereby deleted in their entirety and replaced with “BCI IV OpCo.” |
c. | All references in the Partnership Agreement to “IPT Holdco” are hereby deleted in their entirety and replaced with “BCI IV Holdco.” |
3. | New Defined Terms. The Partnership Agreement is hereby amended by adding to the Partnership Agreement each of the below terms following the first instance of use of each such term in the Partnership Agreement (as amended hereby): |
“BCI IV” means Black Creek Industrial REIT IV Inc., a Maryland corporation.
“BCI IV HoldCo” means BCI IV Portfolio Real Estate Holdco LLC, a Delaware limited liability company, which is a subsidiary of BCI IV OpCo.
“BCI IV OpCo” means BCI IV Operating Partnership LP, a Delaware limited partnership, which is a subsidiary of BCI IV.
4. | Effective Time. This Amendment shall be deemed effective upon the consummation of the Interest Sale. |
5. | Entire Agreement. The Partnership Agreement, as amended by this Amendment, constitutes the entire agreement between the Partners and supersedes any prior agreements or understandings between them with respect to the subject matter thereof. |
6. | Full Force and Effect. Except as expressly amended hereby, the Partnership Agreement shall remain in full force and effect. |
7. | Binding Effect. Except as otherwise provided in this Amendment, every covenant, term and provision of the Partnership Agreement, as amended by this Amendment, shall be |
binding upon and inure to the benefit of the Partners and their respective successors, transferees and assigns.
8. | Headings. Section and other headings contained in this Amendment are for reference purposes only and are not intended to describe, interpret, define or limit the scope, extent or intent of this Amendment or any provision hereof. |
9. | Severability. Every provision of this Amendment is intended to be severable. If any term or provision hereof is illegal or invalid for any reason whatsoever, such illegality or invalidity shall not affect the legality or validity of the remainder of this Amendment. |
10. | Construction. Every covenant, term and provision of this Amendment shall be construed simply according to its fair meaning and not strictly for or against any Partner. |
11. | Further Action. Each Partner, upon the request of the General Partner, agrees to perform all further acts and execute, acknowledge and deliver any documents which may be reasonably necessary, appropriate or desirable to carry out the provisions of this Amendment. |
12. | Applicable Law. Notwithstanding the place where this Amendment may be executed by any of the parties hereof, this Amendment, the rights and obligations of the parties hereto, and any claims and disputes relating thereto shall be subjected to and governed by the Act and the other laws of the State of Delaware as applied to agreements among Delaware residents to be entered into and performed entirely within the State of Delaware, and such laws shall govern all aspects of this Amendment, including, without limitation, the limited partnership aspects of this Amendment. |
13. | Counterpart Execution. This Amendment may be executed in any number of counterparts, and each such counterpart shall be deemed to be an original instrument, but all such counterparts together shall constitute but one agreement. This Amendment may be delivered by one or more parties by facsimile or similar electronic transmission device pursuant to which the signature of or on behalf of such party can be seen, and such execution and delivery shall be considered valid, binding and effective for all purposes. |
IN WITNESS WHEREOF, the General Partner has executed this Amendment as of the date first above written.
GENERAL PARTNER
IPT BTC I GP LLC, a Delaware limited liability company
By:IPT Real Estate Holdco LLC, a Delaware limited liability company, its sole member
By:Industrial Property Operating Partnership LP, a Delaware limited partnership, its sole member
By:Industrial Property Trust, a Maryland real estate investment trust, its general partner
By: /s/ Thomas G. McGonagle
Name: Thomas G. McGonagle
Title: Chief Financial Officer
Exhibit 10.5
AGREEMENT OF LIMITED PARTNERSHIP OF
BUILD-TO-CORE INDUSTRIAL PARTNERSHIP II LP
|
|
|
|
|
|
TABLE OF CONTENTS |
|||||
Page |
|||||
ARTICLE 1. AFFIRMATION, NAME, PLACE OF BUSINESS, TERM, AND PARTNERS |
2 |
||||
1.1 |
Formation of Partnership; Certificate of Limited Partnership |
2 |
|||
1.2 |
Name and Offices |
2 |
|||
1.3 |
Term |
2 |
|||
1.4 |
Registered Office and Agent |
2 |
|||
1.5 |
Certificate of Limited Partnership |
2 |
|||
1.6 |
Partners |
3 |
|||
ARTICLE 2. PURPOSES AND OBJECTIVES |
3 |
||||
2.1 |
Purposes |
3 |
|||
2.2 |
Overview |
4 |
|||
2.3 |
Financing |
4 |
|||
ARTICLE 3. EXECUTIVE COMMITTEE |
4 |
||||
3.1 |
Composition |
4 |
|||
3.2 |
Role of Executive Committee |
6 |
|||
3.3 |
Meetings |
6 |
|||
ARTICLE 4. INVESTMENTS; CAPITAL CONTRIBUTIONS |
7 |
||||
4.1 |
Identification Period; Investment Period; Process for Investments; Diligence; Recommendation and Approval |
7 |
|||
4.2 |
Percentage Interests; Interests |
8 |
|||
4.3 |
Capital Contributions |
9 |
|||
4.4 |
Treatment of Defaulting Partner |
12 |
|||
4.5 |
Capital Accounts |
15 |
|||
4.6 |
No Interest on, or Right to Return of Capital Contributions or Capital Account |
16 |
|||
4.7 |
Cash Contributions |
16 |
|||
ARTICLE 5. DISTRIBUTIONS AND ALLOCATIONS |
16 |
||||
5.1 |
Defined Terms |
16 |
|||
5.2 |
Distributions |
16 |
|||
5.3 |
Carried Interest Amounts |
16 |
|||
5.4 |
Timing of Distributions |
16 |
|||
5.5 |
Allocations |
17 |
|||
5.6 |
No Violations |
17 |
|||
5.7 |
Withholding |
17 |
|||
ARTICLE 6. MANAGEMENT AND EXPENSES |
19 |
||||
6.1 |
Management |
19 |
|||
6.2 |
Restrictions on Authority of the General Partner |
21 |
|||
6.3 |
Duties and Obligations of the General Partner |
21 |
|||
6.4 |
Fees; Expenses |
28 |
|||
6.5 |
Permitted Other Activities |
29 |
i
6.6 |
Presentation of Investments |
29 |
|||
6.7 |
Limitations on Liability; Indemnification |
30 |
|||
6.8 |
Designation of Tax Matters Partner |
32 |
|||
6.9 |
Prohibited Payments |
34 |
|||
6.10 |
QuadReal Limited Partner Matters |
34 |
|||
6.11 |
Partnership Tax Audit Procedures for Tax Years Ending after December 31, 2017 |
35 |
|||
ARTICLE 7. WITHDRAWAL AND REMOVAL OF GENERAL PARTNER |
38 |
||||
7.1 |
Voluntary Withdrawal |
38 |
|||
7.2 |
Bankruptcy or Dissolution of the General Partner |
38 |
|||
7.3 |
Liability of Withdrawn General Partner |
38 |
|||
7.4 |
Removal of General Partner for Cause |
38 |
|||
ARTICLE 8. TRANSFER OF INTERESTS |
39 |
||||
8.1 |
Assignments |
39 |
|||
8.2 |
Admission of Assignees as Substituted Partners |
48 |
|||
ARTICLE 9. BUY-SELL; FORCED SALE; DISPUTE RESOLUTION |
48 |
||||
9.1 |
Buy-Sell |
48 |
|||
9.2 |
Forced Sale |
53 |
|||
9.3 |
Specific Performance |
60 |
|||
9.4 |
Dispute Resolution |
61 |
|||
ARTICLE 10. DISSOLUTION AND LIQUIDATION OF THE PARTNERSHIP |
61 |
||||
10.1 |
Events Causing Dissolution |
61 |
|||
10.2 |
Liquidation |
62 |
|||
ARTICLE 11. BOOKS AND RECORDS, ACCOUNTING, REPORTS, TAX ELECTIONS, ETC. |
63 |
||||
11.1 |
Books and Records |
63 |
|||
11.2 |
Accounting and Fiscal Year |
64 |
|||
11.3 |
Bank Accounts and Investment |
64 |
|||
11.4 |
Tax Depreciation and Elections |
65 |
|||
11.5 |
Interim Closing of the Books |
65 |
|||
11.6 |
Information from the Limited Partners and the Special Limited Partner |
65 |
|||
ARTICLE 12. MISCELLANEOUS |
65 |
||||
12.1 |
Remedies |
65 |
|||
12.2 |
Notice |
66 |
|||
12.3 |
Appointment of General Partner as Attorney-in-Fact |
66 |
|||
12.4 |
Amendments |
66 |
|||
12.5 |
Entire Agreement |
67 |
|||
12.6 |
Successors |
67 |
|||
12.7 |
Representations and Warranties of the General Partner |
67 |
|||
12.8 |
Representations and Warranties of the Limited Partners and the Special Limited Partner |
68 |
|||
12.9 |
Meaning of Certain Terms |
71 |
|||
12.10 |
Counterparts |
72 |
ii
12.11 |
Confidentiality |
72 |
|||
12.12 |
Applicable Law |
74 |
|||
12.13 |
Waiver of Jury Trial |
74 |
|||
12.14 |
Venue |
74 |
|||
12.15 |
Limitation on Benefits |
74 |
iii
Definitions
The following capitalized terms used in this Agreement are defined in the sections indicated below:
|
|
Acceptance Notice |
Section 9.1(a)(ii) |
Acquisition Date |
Section 2.2(b)(i) |
Acquisition Sourcing Team |
Exhibit O |
Act |
Recitals |
Affiliate |
Section 12.9 |
Agreement |
Introduction |
Allocable Share |
Section 8.1(c)(i) |
Allocation Policy |
Section 6.6(b) |
Applicable Information |
Section 12.11(b)(iii) |
Applicable Vehicles |
Section 6.6(b) |
Appraisal Date |
Section 6.3(e)(i) |
Appraisal Notice |
Section 6.3(e)(iii) |
Appraised Value |
Section 6.3(e)(vi) |
Appraisers |
Section 6.3(e)(iii) |
Approval of the Executive Committee |
Section 3.2 |
Approved |
Section 3.2 |
Approved Investment |
Section 4.1(b) |
Approved Partnership Budget |
Section 6.2(c) |
Arbitration Notice |
Section 9.4 |
Benefit Plan Investor |
Section 12.8(k) |
BCG |
Recitals |
BCIG Limited Partner |
Recitals |
BCIG Partners |
Section 4.3(g) |
BTC Intermediate Portfolio Holdco |
Section 2.2(c) |
BTC Portfolio Holdco |
Section 2.2(c) |
Business Day |
Section 3.3(b) |
Buy-Sell |
Section 9.1(a)(i) |
Buy-Sell Closing Period |
Section 9.1(d)(i) |
Buy-Sell Deposit |
Section 9.1(c) |
Buy-Sell Notice |
Section 9.1(a)(i) |
Buy-Sell Price |
Section 9.1(a)(ii) |
Calculation Date |
Section 5.1(a) |
Capital Account |
Section 4.5 |
Capital Call Funding Period |
Section 4.3(d) |
Capital Call Notice |
Section 4.3(d) |
Capital Commitment |
Section 4.3(e) |
Capital Contributions |
Section 4.3(b) |
iv
v
vi
Judicial Review |
Section 6.8(c) |
Key Persons |
Section 6.1 |
Key Person Event |
Section 6.1 |
Leverage Targets |
Section 2.3 |
Limited Partner |
Introduction |
Limited Partner Capital Call |
Section 4.3(d) |
Limited Partner Funding Request |
Section 4.3(d) |
Limited Partners |
Introduction |
Losses |
Section 6.7(b) |
LP Appraiser |
Section 6.3(e)(iii) |
LP Appraiser Appointment Period |
Section 6.3(e)(iii) |
LP Appraiser Notice |
Section 6.3(e)(iii) |
LP Capital Contributions |
Section 5.1(h) |
LP Distributions |
Section 5.1(i) |
LP Indemnitee |
Section 6.7(c) |
Major Decision |
Section 6.2 |
Marketing Period |
Section 9.2(b)(iii) |
Material Adverse Effect |
Section 7.4(a)(i) |
Non-Transfer Option |
Section 8.1(d)(ii) |
OFAC |
Section 12.8(l) |
Offer |
Section 8.1(c)(i) |
Offer Period |
Section 8.1(c)(i) |
Offer Price |
Section 8.1(c)(i) |
Offered Price |
Section 9.1(a)(ii) |
Offeree Partners |
Section 8.1(c)(i) |
Offering Partner |
Section 8.1(c)(i) |
Operating Agreement |
Section 2.2(c) |
Oversight Party |
Section 7.4(b) |
Partner |
Introduction |
Partners |
Introduction |
Partnership |
Introduction |
Partnership Expenses |
Section 6.4(c) |
Partnership Leverage Target |
Section 2.3 |
Partnership Tax Audit Rules |
Section 5.7(a) |
PBSA |
Section 12.11(b)(i) |
Percentage Interests |
Section 4.2(a) |
Person |
Section 12.9 |
Pipeline Investment |
Section 6.6(a) |
Pipeline Screening Notice |
Section 6.6(a) |
Portfolio |
Section 2.2(a)(i) |
Portfolio Appraisal |
Section 6.3(e)(ii) |
Portfolio Value |
Section 6.3(e)(iv) |
vii
viii
ROFO Election |
Section 9.2(b)(i) |
ROFO Price |
Section 9.2(a)(ii) |
ROFO Sale |
Section 9.2(b)(i) |
ROFR Closing Period |
Section 9.2(b)(iv)(B) |
ROFR Election |
Section 9.2(b)(iv)(A) |
ROFR Exercise Period |
Section 9.2(b)(iv)(A) |
ROFR Notice |
Section 9.2(b)(iv)(A) |
ROFR Price |
Section 9.2(b)(iv)(A) |
ROFR Sale |
Section 9.2(b)(iv)(A) |
SEC |
Section 9.1(a)(iii) |
Securities Act |
Section 12.8(d) |
Sell-Down Transferee |
Section 8.1(e) |
Selling Partner |
Section 9.1(a)(ii) |
Senior Preferred Equity Contributions |
Section 4.4(b)(ii) |
Senior Preferred Return |
Section 4.4(b)(ii) |
Special Limited Partner |
Introduction |
Special Limited Partner Carried Interest Amount |
Section 5.1(j) |
Stabilization |
Section 2.3 |
Strategic Land Investment |
Section 6.2(a) |
Subsidiary REIT |
Section 6.3(a)(xxv) |
Substitute General Partner List |
Section 7.4(d) |
Supporting Materials |
Section 6.3(b)(i) |
Tag Along Notice |
Section 8.1(d)(i) |
Tag Along Offer Terms |
Section 8.1(d)(i) |
Tag Along Option |
Section 8.1(d)(ii) |
Tag Along Purchaser |
Section 8.1(d)(i) |
Tag Along Transfer |
Section 8.1(d) |
Tax Audit |
Section 6.8(c) |
Tax Matters Partner |
Section 6.8(a) |
Tax Representative |
Section 6.11(b) |
Term |
Section 1.3 |
Transfer |
Section 8.1(a) |
Transferee |
Section 8.1(a) |
Treaty |
Section 5.7(d)(ii) |
Trigger Date |
Section 8.1(b) |
Triggering Partner |
Section 9.1(a)(i) |
Unfunded Amount |
Section 4.4(a) |
Unrelated Third Party |
Section 12.9 |
Value-Add Investment |
Section 2.2(b)(vi) |
Willful Bad Acts |
Section 7.4(a)(v) |
ix
Schedules and Exhibits
|
|
Schedule 1 |
Names, Addresses, Percentage Interests of Partners |
Exhibit A |
Capital Accounts; Allocation Rules |
Exhibit B |
Investment Markets |
Exhibit C |
Target Investment Characteristics |
Exhibit D |
GP Fees |
Exhibit E |
Substitute General Partner List |
Exhibit F |
CPR Arbitration |
Exhibit G |
Form of Investment Entity Operating Agreement |
Exhibit H |
Reporting Requirements |
Exhibit I |
Objectives |
Exhibit J |
Certain Defined Terms and Distributions |
Exhibit K |
Restrictions on Authority |
Exhibit L |
Presentation of Investments |
Exhibit M |
Cause |
Exhibit N |
Form of QFPF Certification |
Exhibit O |
Allocation Policy |
x
AGREEMENT OF LIMITED PARTNERSHIP OF
BUILD-TO-CORE INDUSTRIAL PARTNERSHIP II LP
THIS AGREEMENT OF LIMITED PARTNERSHIP (this “Agreement”) of Build- To-Core Industrial Partnership II LP, a Delaware limited partnership (the “Partnership”) is made and entered into as of May 19, 2017 (the “Effective Date”), by and among: (a) IPT BTC II GP LLC, a Delaware limited liability company, as general partner (the “General Partner”), which is a subsidiary of IPT Real Estate Holdco LLC, a Delaware limited liability company (“IPT HoldCo”), which in turn is a subsidiary of Industrial Property Operating Partnership LP (“IPT OpCo”), which in turn is a subsidiary of Industrial Property Trust Inc. (“IPT”); (b) IPT BTC II LP LLC, a Delaware limited liability company, which is a subsidiary of IPT HoldCo, which in turn is a subsidiary of IPT OpCo, which in turn is a subsidiary of IPT, as a limited partner (the “IPT Limited Partner” and, together with the General Partner, collectively, the “IPT Partners”); (c) Industrial Property Advisors Sub IV LLC, a Delaware limited liability company (the “Special Limited Partner”), which is a subsidiary of Industrial Property Advisors LLC (“IPT Advisors”), which in turn is a subsidiary of Industrial Property Advisors Group LLC (“IPT Advisors Group”), as a limited partner; (d) BCG BTC II Investors LLC, a Delaware limited liability company (the “BCIG Limited Partner”), an Affiliate of Black Creek Group LLC, a Colorado limited liability company (“BCG”); (e) bcIMC (WCBAF) Realpool Global Investment Corporation, a Canadian corporation, as a limited partner (“QuadReal WCBAF”); (f) bcIMC (College) US Realty Inc., a Canadian corporation, as a limited partner (“QuadReal College”); (g) bcIMC (Municipal) US Realty Inc., a Canadian corporation, as a limited partner (“QuadReal Municipal”); (h) bcIMC (Public Service) US Realty Inc., a Canadian corporation, as a limited partner (“QuadReal Public Service”); (i) bcIMC (Teachers) US Realty Inc., a Canadian corporation, as a limited partner (“QuadReal Teachers”); (j) bcIMC (WCB) US Realty Inc., a Canadian corporation, as a limited partner (“QuadReal WCB”); (k) bcIMC (Hydro) US Realty Inc., a Canadian corporation, as a limited partner (“QuadReal Hydro”); and (i) QuadReal US Holdings Inc., a Canadian corporation, as a limited partner (“QuadReal US” and, together with QuadReal WCBAF, QuadReal College, QuadReal Municipal, QuadReal Public Service, QuadReal Teachers, QuadReal WCB and QuadReal Hydro, collectively, the “QuadReal Limited Partner”). QuadReal WCBAF, QuadReal College, QuadReal Municipal, QuadReal Public Service, QuadReal Teachers, QuadReal WCB, QuadReal Hydro, QuadReal US, the IPT Limited Partner and the BCIG Limited Partner shall each be referred to herein individually as a “Limited Partner” and collectively as the “Limited Partners” and the Limited Partners, the Special Limited Partner and the General Partner, each shall be referred to herein individually as a “Partner” and collectively as the “Partners.”
RECITALS
WHEREAS, on May 18, 2017 (the “Formation Date”), the General Partner executed a Certificate of Limited Partnership (the “Certificate of Limited Partnership”) forming the Partnership as a limited partnership under the Delaware Revised Uniform Limited Partnership Act (6 Del. C. §§ 17-101 et seq.) (as amended from time to time, the “Act”) and filed such certificate among the partnership records of the State of Delaware on the Formation Date; and
WHEREAS, the parties hereto hereby agree to become Partners upon the terms and conditions set forth herein.
NOW, THEREFORE, for and in consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are acknowledged hereby, the Partners agree as follows:
ARTICLE 1.
AFFIRMATION, NAME, PLACE OF BUSINESS, TERM, AND PARTNERS
1.1 | Formation of Partnership; Certificate of Limited Partnership.The Partners |
hereby:
(a) | ratify the formation of the Partnership as a limited partnership pursuant to |
the Act and ratify the filing of the Certificate of Limited Partnership with the Secretary of State of the State of Delaware on the Formation Date;
(b) | confirm and agree to their status as partners of the Partnership; and |
2
appropriate office in that jurisdiction a copy of the Certificate of Limited Partnership and any other documents necessary for the Partnership to qualify to transact business in such jurisdiction. The General Partner further agrees to execute, acknowledge and cause to be filed, in the place or places and in the manner prescribed by law, any amendments to the Certificate of Limited Partnership as may be required, either by the Act, by the laws of a jurisdiction in which the Partnership transacts business or by this Agreement, to reflect changes in the information contained therein or otherwise to comply with the requirements of law for the continuation, preservation and operation of the Partnership as a limited partnership under the Act, and the Limited Partners and the Special Limited Partner shall join in the execution and delivery of such certificates or documents, as reasonably necessary to comply with the Act or other applicable law.
1.6 | Partners. |
ARTICLE 2.
PURPOSES AND OBJECTIVES
3
industrial- type properties in the United States (indirectly, through the Investment Entities) and engage in any other activities related or incidental thereto, in each case in accordance with this Agreement.
ARTICLE 3.
EXECUTIVE COMMITTEE
4
times during the Term, the Executive Committee shall be comprised of two (2) members (each member, a “Representative”) consisting of: (a) one (1) Representative appointed by the IPT Limited Partner (the “IPT Representative”); and (b) one (1) Representative appointed by QuadReal US (the “QuadReal Representative”); provided that, following an IPT Sell-Down, the Executive Committee shall be comprised of three (3) members consisting of: (a) the IPT Representative; (b) the QuadReal Representative; and (c) one (1) Representative appointed by the Sell-Down Transferee. As of the date hereof, the Representatives shall be: (i) either Dwight Merriman or Tom McGonagle, appointed by the IPT Limited Partner; and (ii) Timothy Works, appointed by QuadReal US. For purposes of clarity, (i) with respect to the QuadReal Representative, the consent of either Timothy Works or any additional representative appointed by QuadReal US pursuant to this Section 3.1 with respect to any matter requiring the Approval of the Executive Committee hereunder shall be deemed to be the consent of the QuadReal Representative with respect to such matter and any Partner’s or Representative’s obligation to provide notice to or solicit the consent of the QuadReal Representative hereunder shall be deemed satisfied to the extent such Partner or Representative provides notice to or solicits the consent of either Timothy Works or any additional representative appointed by QuadReal US pursuant to this Section 3.1, and (ii) with respect to the IPT Representative, the consent of either Dwight Merriman, Tom McGonagle or any additional representative appointed by the IPT Limited Partner pursuant to this Section 3.1 with respect to any matter requiring the Approval of the Executive Committee hereunder shall be deemed to be the consent of the IPT Representative with respect to such matter and any Partner’s or Representative’s obligation to provide notice to or solicit the consent of the IPT Representative hereunder shall be deemed satisfied to the extent such Partner or Representative provides notice to or solicits the consent of either Dwight Merriman, Tom McGonagle or any additional representative appointed by the IPT Limited Partner pursuant to this Section 3.1. To the fullest extent permitted by law, each Representative shall be entitled to consider only such interests and factors as it desires, including the Partners’ respective interests, and shall have no fiduciary duty or other duty or obligation to give any consideration to any interest of, or factors affecting, any other Person. In the event of the resignation or death of a Representative, the Partner that so appointed such Representative shall designate a successor to such Representative within thirty (30) days after such resignation or death by written notice to all of the Partners. Any Partner also shall have the right to replace or supplement the list of individuals appointed to serve as its Representative by giving written notice of the removal, replacement or supplement of such Representative to all of the Partners, and, in the case of removal of its last Representative, together with its appointment of a replacement therefor. For the avoidance of doubt, a Partner may appoint more than one individual to serve as its Representative, but only one such individual may act as the Representative of such Partner with respect to any particular matter before the Executive Committee. Representatives shall be entitled to reimbursement from the Partnership for their reasonable travel expenses and other reasonable out-of-pocket expenses incurred in connection with their attendance at meetings of the Executive Committee (provided, however, that with respect to any particular meeting of the Executive Committee, the Partnership shall only be obligated to reimburse the expenses of one (1) individual for the QuadReal Representative and one (1) individual for the IPT Representative in connection with such meeting), but shall not be entitled to any fees, remuneration or other reimbursements from the Partnership or any of the Partners. Each Representative shall be bound by Section 12.11 of this Agreement.
5
3.3 | Meetings. |
6
ARTICLE 4.
INVESTMENTS; CAPITAL CONTRIBUTIONS
7
Partnership to invest in any Proposed Investment. Each Proposed Investment which is Approved by the Executive Committee hereinafter is referred to as an “Approved Investment.”
4.2 | Percentage Interests; Interests. |
3.02 of IRS Notice 2005-43, and consistent with Rev. Proc. 93-27, which initially has a zero
8
liquidation value (as a result of the priority repayment of Capital Contributions pursuant to Section 5.2(a)(iii) of Exhibit J hereof). The Percentage Interests of the Partners as of the date of this Agreement are set forth on Schedule 1 attached hereto, which may be revised from time to time by the General Partner (without the consent of the Limited Partners or the Special Limited Partner) to reflect the then applicable Percentage Interests of the Partners. Except as otherwise provided under this Agreement, the respective Percentage Interests of the Partners also shall constitute the respective voting interests of the Partners for any votes of the Partners required or permitted under the Act or this Agreement with regard to any matter specifically requiring a vote of the Partners under this Agreement.
4.3 | Capital Contributions. |
(a) | Intentionally omitted. |
9
10
otherwise agreed to make Capital Contributions in respect of any such variances and the General Partner shall have no liability with respect to the incurrence of any such variances;
11
respect to each Partner, the “Capital Commitment”) or (ii) make Capital Contributions after the expiration of the Investment Period in respect of any Proposed Investment not Approved by the Executive Committee on or before the expiration of the Investment Period.
4.4 | Treatment of Defaulting Partner. |
12
13
Contributing Partner(s). Further, in such event when any IPT Partner is the Defaulting Partner and to the extent such IPT Partner fails to cure the applicable default within ten (10) Business Days following receipt of written notice from the QuadReal Limited Partner, the QuadReal Limited Partner shall have the right to declare by written notice to the General Partner that each of the percentages set forth in Sections 5.2(a)(v)(y), 5.2(a)(v)(z), 5.2(a)(vi)(y) and 5.2(a)(vi)(z) shall be decreased to an amount (expressed as a percentage) equal to the product of (A) such percentage and (B) a fraction, the numerator of which is the IPT Partners’ aggregate Percentage Interests after adjustment pursuant to this Section 4.4(b)(iii) and the denominator of which is the IPT Partners’ aggregate Percentage Interests prior to adjustment pursuant to this Section 4.4(b)(iii), and following the adjustments pursuant to this Section 4.4(b)(iii), each of the percentages set forth in Sections 5.2(a)(v)(x) and 5.2(a)(vi)(x) shall be increased by a corresponding amount so that the total of the percentages set forth in Sections 5.2(a)(v) and 5.2(a)(vi) is always one hundred percent (100%).
For purposes of this Section 4.4(b), if more than one Contributing Partner elects to make a Senior Preferred Equity Contribution pursuant to clause (ii) above and/or to make an additional Capital Contribution pursuant to clause (iii) above, such Contributing Partners will fund their pro rata share, based on relative Percentage Interests, of such Senior Preferred Equity Contribution and/or Capital Contribution, as applicable, in an aggregate collective amount equal to the Unfunded Amount. If only one Contributing Partner elects to make a Senior Preferred Equity Contribution or an additional Capital Contribution, the electing Contributing Partner shall fund the Senior Preferred Equity Contribution or Capital Contribution, as applicable, in the entire amount of the Unfunded Amount.
14
pursuant to Section 8.1(d), (C) the right to deliver a Buy-Sell Notice pursuant to Section 9.1 and (D) the right to initiate a Forced Sale pursuant to Section 9.2;
15
ARTICLE 5.
DISTRIBUTIONS AND ALLOCATIONS
5.4 | Timing of Distributions. |
16
5.7 | Withholding. |
17
such Partner’s expense. If, and to the extent, reasonably requested in writing by a Partner, and at the expense of the requesting Partner, the General Partner shall use commercially reasonable efforts to cause such filings, applications or elections to be prepared and filed on the Partner’s behalf with respect to Exemptions from withholding or other tax arising out of the Partner’s Interest.
(d) | Tax Status of the QuadReal Limited Partner. |
18
ARTICLE 6.
MANAGEMENT AND EXPENSES
19
20
6.3 | Duties and Obligations of the General Partner. |
21
22
23
(b) | Partnership Budget. |
24
annual budget prior to its approval, the General Partner shall submit a revised annual budget to the Executive Committee for its consideration and approval as a Major Decision pursuant to Section 6.2(c), together with any new, additional or updated Supporting Materials (not previously provided) that are reasonably necessary for the Executive Committee to make an informed decision about the revised draft annual budget. If the Executive Committee rejects the draft annual budget for any calendar year that is submitted to it for approval as a Major Decision pursuant to Section 6.2(c), then not later than fifteen (15) Business Days after such rejection, the General Partner shall prepare and submit to the Executive Committee, for its consideration and approval as a Major Decision pursuant to Section 6.2(c), either the same or a revised draft of the annual budget for such year, incorporating any such changes the General Partner elects to make based upon its good faith consideration of any feedback and comments provided on the prior draft annual budget by a Representative to the General Partner (other than changes that are inconsistent with the manner in which GP Fees are computed in accordance with Exhibit D). Upon the Approval of the full draft budget by the Executive Committee pursuant to Section 6.2(c), such budget shall become the Approved Partnership Budget for all purposes under this Agreement and shall supersede any prior Approved Partnership Budget; provided, however, if the Representatives are unable to agree on an annual budget, the prior year’s Approved Partnership Budget shall continue in effect (save and except in respect of non-recurring line items), adjusted by uncontrollable costs (such as, insurance, taxes and utilities), inflation and the requirements of tenant leases entered into by the Investment Entities. The failure of the Executive Committee to Approve two
(2) consecutive annual budgets within the time periods set forth in this Section 6.3(b)(i) shall be deemed to be a Deadlock Event.
25
(e) | Appraisals. |
26
Notice (the “LP Appraiser Appointment Period”) by providing notice to the General Partner of such appointment (the “LP Appraiser Notice”). If the QuadReal Limited Partner fails to appoint the LP Appraiser within the LP Appraiser Appointment Period, the Portfolio Appraisal shall be conclusive on the Partners. If both the GP Appraiser and the LP Appraiser are appointed, then the GP Appraiser and the LP Appraiser shall thereafter appoint a third (3rd) Qualified Appraiser (the “Independent Appraiser” and, together with the GP Appraiser and the LP Appraiser, collectively, the “Appraisers”) and give notice thereof to the Partners within ten (10) days following the General Partner’s receipt of the LP Appraiser Notice (the “Independent Appraiser Appointment Period”). If the GP Appraiser and the LP Appraiser fail to appoint the Independent Appraiser within the Independent Appraiser Appointment Period, any Partner (other than the Special Limited Partner) may petition a court of competent jurisdiction to appoint the Independent Appraiser.
27
appraised by a Qualified Appraiser, the acquisition and development cost paid by the Partnership for the Partnership’s interest in such Investment shall, for all purposes of this Agreement, be deemed to be its value established pursuant to this Section 6.3(e) until such time as such Investment is appraised in accordance with this Section 6.3.
6.4 | Fees; Expenses. |
28
valuations, tax and REIT compliance activities, financing activities and the preparation of reporting packages or reconciliations, in each case in respect of the Investment Entities or the Investments, shall be deemed to be Partnership Expenses to the extent such expenses are included in the Approved Partnership Budget or otherwise Approved by the Executive Committee, it being understood that the General Partner shall have no obligation to oversee or provide the foregoing activities unless there exists an Approved Partnership Budget for the internal time of employees of the General Partner or its Affiliates performing the same. Notwithstanding the foregoing, any costs or expenses incurred by the Partnership or a Subsidiary REIT in connection with establishing and maintaining the REIT status of such entity shall be borne entirely by the QuadReal Limited Partner, except to the extent the Sell-Down Transferee requires similar REIT services and structural considerations, in which case, such costs and expenses shall be borne by the Partnership.
6.5 | Permitted Other Activities. |
Subject to Section 6.6, any Partner may engage independently or with others in other business ventures of every nature and description. Except as otherwise expressly provided herein, nothing in this Agreement shall be deemed to prohibit any Affiliate of a Partner from dealing, or otherwise engaging in business, with Persons transacting business with the Partnership or an Investment Entity or from providing services relating to the purchase, sale, financing, management, development, operation, leasing or disposition of industrial-type facilities and receiving compensation therefor, even if competitive with the business of the Partnership or the Investment Entities. Except to the extent provided for under this Agreement, no Partner shall have any right by virtue of this Agreement or the relationship created hereby in or to such other ventures or activities or to the income or proceeds derived therefrom, even if competitive with the business of the Partnership hereunder or any of the Investment Entities.
6.6 | Presentation of Investments. |
29
The Partners have set forth certain terms relating to the presentation of Investments in Exhibit L, which is incorporated by reference and attached hereto; all references herein to Section 6.6 shall be referred to Exhibit L.
6.7 | Limitations on Liability; Indemnification. |
30
Indemnitees and the GP Indemnitees, the “Indemnitees”) to the fullest extent permitted by law from and against any and all Losses to the extent caused by the Willful Bad Acts or gross negligence by the General Partner or any GP Indemnitee.
31
6.8 | Designation of Tax Matters Partner. |
32
promptly send each Partner a copy of the documents so received. If the Tax Matters Partner intends to respond in writing to any such documents received from the IRS, the Tax Matters Partner shall use commercially reasonable efforts to provide a copy of its proposed response to all other Partners before such response is to be submitted to the IRS and shall consider in good faith any comments received from other Partners with respect to such proposed response.
(d) | Authorized Actions of Tax Matters Partner. The Tax Matters Partner is |
authorized:
(e) | Indemnification of Tax Matters Partner.Notwithstanding any other |
provision of this Agreement (but subject to Section 6.7 of this Agreement), the Partnership shall indemnify, and reimburse, to the fullest extent permitted by law, the Tax Matters Partner for all
33
Losses incurred in connection with any Tax Audit or Judicial Review proceeding with respect to the tax liability of the Partners, except to the extent the Tax Matters Partner’s conduct constituted a Willful Bad Act or gross negligence.
6.10 | QuadReal Limited Partner Matters. |
34
35
litigation. The Partnership shall reserve sufficient capital, and if necessary the Partners may be required to contribute additional capital in a capital call, as set out in subsection (e) above, to pursue such litigation.
36
if so authorized by the Executive Committee, may, at its discretion, make a claim against any former Partners who were Partners in the Partnership at any time during the adjusted year(s). The General Partner may claim against said former Partners any amount up to the former Partner’s pro rata share (based on percentage ownership of the Partnership, prorated by the number of days that Partner owned a Partnership Interest during the reviewed year) of the Partnership assessment or settlement for the adjusted year(s). To the extent that the General Partner recoups such claims from former Partners, the current Partners’ contributions for the reviewed year assessment or settlement shall be reduced proportionally to the amount collected from the former Partners. This provision shall survive the withdrawal, removal, resignation or sale of any Partnership Interest as to the withdrawn, resigned, removed, or former Partner. Failure to make such a contribution, after (30) thirty written notice of such claim by the General Partner, by the former Partner shall be considered a breach of this Agreement.
(10) Business Days of notice. The General Partner, at its option, may seek reimbursement of all audit expenses and all litigation expenses related to the determination of the correct tax liability of the Partnership from the Partners and former Partners. The General Partner will allocate these expenses equitably among the Partners in seeking reimbursement. This allocation will consider the adjustment to the distributive share of the Partner or the former Partner in the reviewed year and the contribution of that adjustment to the imputed underpayment of the Partnership. After determining the Partners' and former Partners' shares of these expenses, the General Partner will promptly invoice each Partner and former Partner during the reviewed year for that Partner or former Partner's equitable share of these expenses. This invoice will be payable on demand. The Partnership will retain its records with respect to each Fiscal Year until the expiration of the period within which additional federal or state income tax may be assessed for the year.
37
take such actions reasonably requested by the Tax Representative in furtherance of such administrative adjustment request.
ARTICLE 7.
WITHDRAWAL AND REMOVAL OF GENERAL PARTNER
38
ARTICLE 8.
TRANSFER OF INTERESTS
8.1 | Assignments. |
39
(I) a nationally-recognized manager of investment funds that (x) invests in debt or equity interests relating to commercial real estate, (y) invests through a fund with committed capital of at least One Billion Dollars ($1,000,000,000), and (z) is not the subject of a bankruptcy proceeding or (II) an entity that is otherwise a Qualified Institutional Transferee under clauses (A), (B) or (C) above acts as the general partner, managing member or fund manager and at least fifty percent (50%) of the equity interests in such investment vehicle are owned, directly or indirectly, by one or more Persons that are otherwise Qualified Institutional Transferees under clauses (A), (B) or (C) above (each of the foregoing, a “Qualified Institutional Transferee”);
As used herein, “Eligibility Requirements” shall mean with respect to any Person, that (x) such Person has total assets (in name, under management or advisement and/or pursuant to undrawn, binding, irrevocable capital commitments) in excess of One Billion Dollars ($1,000,000,000) and (except with respect to a pension advisory firm, registered investment advisor or asset manager) capital/statutory surplus, shareholder’s equity and/or undrawn, binding, irrevocable capital commitments of at least Two Hundred Fifty Thousand Dollars ($250,000,000) and (y) such
40
Person is regularly engaged in the business of making or owning (or, in the case of a pension advisory firm, registered investment advisor, asset manager or similar fiduciary, regularly engaged in managing investments in) debt or equity interests relating to commercial real estate.
In addition, subject to Sections 8.1(c) and (d), at any time following the Trigger Date, upon receipt of prior written approval thereof by the QuadReal Limited Partner (such approval not to be unreasonably withheld, conditioned or delayed, provided, that it shall be deemed reasonable to take into consideration factors other than financial capability), the General Partner may, on its own behalf and on behalf of the IPT Limited Partner, Transfer all of the Interests held by the General Partner and the IPT Limited Partner in the Partnership to a Qualified Institutional Transferee, in which event the provisions of Article 7 shall apply governing substitution of the General Partner and transition of its duties and responsibilities to a substitute general partner of the Partnership.
(c) | Rights of First Opportunity. |
(ii) | Closing. |
41
(A) | Closing Date. The closing of the sale of Interests to the Offeree Partner(s) pursuant to this Section 8.1(c) shall be held on the date mutually selected by the Offeree Partner(s) that is no later than sixty (60) days after the delivery of the last ROFO Acceptance Notice (the “Closing Period”). The closing shall be completed through a customary closing escrow, and the Offer Price shall be paid by wire transfer of immediately available federal funds. The closing of the sale of Interests to the Offeree Partner(s) pursuant to this Section 8.1(c) shall be on an “as is” and “where is” basis with no representations or warranties other than a representation from the Offering Partner that (A) it owns the Interest being transferred free and clear of all liens, claims and encumbrances other than permitted liens, claims or encumbrances that were deducted in determining the applicable price of the Interest and liens, claims and encumbrances securing indebtedness of the Partnership or an Investment Entity, (B) it has full right and authority to sell such Interest and that the sale has been duly authorized, |
(C) the assignment document has been duly authorized, executed and delivered, (D) the consummation of the transactions contemplated thereby will not violate the terms of any agreement to which the Offering Partner is a party, or any order, judgment, or decree applicable to the Offering Partner and (E) no consent, approval, or authorization of or designation, declaration, or filing with any governmental authority or other Person is required on the part of the Offering Partner in connection with the consummation of the transactions contemplated hereby or, if required, has been obtained (clauses (A) - (E), the “Required Representations”).
(B) | Required Documents. Prior to or at the closing of the sale of Interests to the Offeree Partner(s) pursuant to this Section 8.1(c), the Offering Partner shall supply to the Offeree Partner(s) all documents customarily required (or reasonably required by the Offeree Partner(s)) to make a good and sufficient conveyance of such Interest to the Offeree Partner(s), which documents shall be in form and substance reasonably satisfactory to the Offeree Partner(s) and the Offering Partner. |
(C) | Conditions Precedent to Closing. The obligation of the Offeree Partner(s) to pay the purchase price in connection with a sale of Interests pursuant to this Section 8.1(c) shall be conditioned upon the Interest being transferred free and clear of all liens, claims and encumbrances, other than |
42
permitted liens, claims and encumbrances that were waived by the Offeree Partner(s) and deducted in determining the applicable price of the Interest and permitted liens, claims and encumbrances securing indebtedness of the Partnership or the Investment Entities. This condition is for the sole benefit of the Offeree Partner(s) and may be waived by the Offeree Partner(s) in whole or in part in each of their sole discretion.
(D) | Brokerage. No brokerage fees or commissions shall be payable by the Partnership in connection with any purchase pursuant to this Section 8.1(c), and each Partner shall indemnify and hold harmless the Partnership and the other Partners from and against any such claims made based upon the actions of such Partner, including any fees and expenses in defending any such claims. |
(iii) | In connection with any sale made pursuant to this Section 8.1(c): |
(A) | the Offeree Partner(s) shall pay all fees and costs customarily paid by purchasers of companies that own and operate real property in each jurisdiction where the Investments are located (which may include title fees, recording costs, recording and transfer taxes, as applicable); |
(B) | the Offering Partner shall pay all fees and costs customarily paid by sellers of companies that own and operate real property in each jurisdiction in which the Investments are located (which may include title fees, recording costs, recording and transfer taxes, as applicable); |
(C) | the Offering Partner and the Offeree Partner(s) each shall pay its own legal fees; and |
(D) | the Offeree Partner(s) and the Offering Partner shall adjust the purchase price to reflect all adjustments customarily made in connection with the sale of companies that own and operate real estate in each jurisdiction in which the Investments are located (which may include the proration and apportionment of any revenues and expenses of the Investments). |
In the event of a dispute with respect to any of the adjustments and prorations to be made pursuant to this Section 8.1(c)(iii), each of the purchasing Offeree Partner(s) and the Offering Partner shall submit to an arbitration pursuant to Section 9.4 of this Agreement. The arbitrator shall be limited to awarding only one or the other of the two adjustment proposals submitted.
43
The decision of the arbitrator shall be final and binding on the purchasing Offeree Partner(s) and the Offering Partner.
44
under any circumstance be entitled to (x) issue a ROFO Acceptance Notice, (y) initiate a Buy-Sell pursuant to Section 9.1 or (z) initiate a Forced Sale pursuant to Section 9.2(a).
(A) | all of the material terms and conditions, including consideration pursuant to which it proposes to make such Tag Along Transfer (the “Tag Along Offer Terms”) and |
45
(B) the identity of, and information concerning, the Person (the “Tag Along Purchaser”) to whom it proposes to make such Tag Along Transfer.
46
the IPT Limited Partner shall maintain at least a ten percent (10%) Percentage Interest in the Partnership immediately following any such IPT Sell-Down.
3.1 and the IPT Limited Partner’s rights set forth in Sections 9.1 and 9.2.
47
(i) Continued Obligations. In no event shall a permitted Transfer be deemed to relieve the Partners who transfer their Interests from their obligations and liabilities under this Agreement, including, without limitation, their obligations with respect to Capital Contributions, except obligations arising after the permitted Transferee becomes a substituted Partner in accordance with Section 8.2.
8.2 | Admission of Assignees as Substituted Partners. |
ARTICLE 9.
BUY-SELL; FORCED SALE; DISPUTE RESOLUTION
9.1 | Buy-Sell. |
48
(a) | Process. |
49
have elected to buy the Interest of the Triggering Partner, then the Interest of the Triggering Partner shall be allocated among such Purchasing Partners in proportion to their respective Allocable Share at the time of such purchase.
(d) | Closing. |
50
Partner(s), which documents shall be in form and substance reasonably satisfactory to the Purchasing Partner(s) and the Selling Partner(s).
In the event of a dispute with respect to any of the adjustments and prorations to be made pursuant to this Section 9.1(f), each of the Purchasing Partner(s) and the Selling Partner(s) shall submit to an shall submit to an arbitration pursuant to Section 9.4 of this Agreement. The arbitrator shall be limited to awarding only one or the other of the two adjustment proposals submitted. The decision of the arbitrator shall be final and binding on the Purchasing Partner(s) and the Selling Partner(s).
51
52
Investment (and in the event that such release is not possible in spite of commercially reasonable efforts, a creditworthy entity reasonably acceptable to the Selling Partner(s) shall indemnify the Selling Partner(s) and their respective Affiliates for any claims against the Selling Partner(s) under any such written documents on such terms and conditions to be agreed to by the Selling Partner(s) in each of their reasonable discretion until such indebtedness or obligations are released).
9.2 | Forced Sale. |
(a) | Process. |
53
sale of the Portfolio and assets of the Partnership and the Investment Entities in accordance with the provisions of this Section 9.2. Upon the sale of the Portfolio and assets of the Partnership and the Investment Entities, the Partnership shall be dissolved in accordance with Section 10.1.
(b) | Right of First Offer; Right of First Refusal. |
(y) the Initiator shall be free to initiate and consummate the Forced Sale and, if directed by the Initiator, the General Partner shall market the Portfolio and other assets of the Partnership as promptly as practicable on such terms approved by the Initiator during the remainder of the Term (the “Marketing Period”) at a price, subject to the following paragraph, not less than ninety-eight percent (98%) of the Proposed Portfolio Price and on such other terms as set forth in the Forced Sale Notice.
(iv) | ROFR. |
54
(A) | If (x) the Recipient(s) fail to timely and properly make a ROFO Election or deliver the ROFO Deposit, and (y) the Initiator subsequently, within the Marketing Period, executes a letter of intent (binding, subject to the Recipient(s)’ rights under this paragraph, or non-binding) for the acquisition of the applicable assets to be sold pursuant to the Forced Sale Notice, and (z) such letter of intent has a proposed cash purchase price of less than ninety-eight percent (98%) of the Proposed Portfolio Price, the Initiator shall not enter into a binding contract with the proposed purchaser or any of its Affiliates unless the Initiator shall provide written notice (the “ROFR Notice”) to the Recipient(s) of (1) the proposed cash purchase price (the “Proposed Purchase Price”) under such letter of intent, (2) a statement setting forth the amount which would be distributed to the Initiator pursuant to Section 5.2 above (after giving effect to all applicable provisions of this Agreement, but after liquidating all reserves then existing and without establishing any additional reserves) if all of the property to be sold as identified in the ROFR Notice were sold on the date of such notice for a gross sales price equal to the Proposed Purchase Price and all liabilities and obligations of the Partnership and any Investment Entity (excluding contingent liabilities) were satisfied from the proceeds from such sales price, and any remaining proceeds were distributed to the Partners in accordance with Section 5.2 (the “ROFR Price”) and (3) the other material economic terms of such sale set forth in such letter of intent. Within twenty-one (21) days after receipt of the ROFR Notice (the “ROFR Exercise Period”), the Recipient shall have the right to offer to purchase all of the Interest of the Initiator to be sold at the ROFR Price and the other applicable terms set forth in the ROFR Notice (the “ROFR Sale”), by giving written notice of such election within the ROFR Exercise Period (the “ROFR Election”), which offer shall be irrevocable, and delivering to a title company or other agent reasonably designated by Initiator, in escrow, a cash deposit equal to five percent (5%) of the ROFR Price (the “ROFR Deposit”), which deposit shall be applied against the ROFR Price at closing and shall be nonrefundable to the Recipient(s) (except in the event of a material default of the Initiator in performing its closing obligations pursuant to Section 9.2(c)). |
(B) | If the Recipient(s) have timely and properly made a ROFR Election and delivered the ROFR Deposit, the Initiator and the Recipient(s) (or their respective designees) shall |
55
consummate the ROFR Sale on an “as is” and “where is” basis with no representations or warranties (other than the Required Representations from the Initiator) within thirty
(30) days after the date such Initiator’s acceptance is received by the Recipient(s) (the “ROFR Closing Period”).
(C) | If the Recipient(s) do not timely or properly make a ROFR Election or fail to deliver the ROFR Deposit in accordance with clause (A) above, (x) the Recipient(s) shall be deemed to have elected not to purchase the Interest to be sold pursuant to the applicable ROFR Notice and (y) the Initiator shall be free to, in accordance with Section 9.2(d) below, cause the Partnership to enter into the Forced Sale with the party executing the letter of intent (or any of its Affiliates or assigns), within sixty (60) days after the expiration of the ROFR Exercise Period at a price which is not less than the Proposed Purchase Price, and otherwise on such terms as set forth in the letter of intent. |
(c) | Terms Applicable to a ROFO Sale/ROFR Sale. |
56
(A) | the Recipient(s) shall pay all fees and costs customarily paid by purchasers of companies that own and operate real property in each jurisdiction where the Investments are located (which may include title fees, recording costs, recording and transfer taxes, as applicable); |
(B) | the Initiator shall pay all fees and costs customarily paid by sellers of companies that own and operate real property in each jurisdiction in which the Investments are located (which may include title fees, recording costs, recording and transfer taxes, as applicable); |
(C) | the Initiator and the Recipient(s) each shall pay its own legal fees; and |
(D) | the Recipient(s) and the Initiator shall adjust the purchase price to reflect all adjustments customarily made in connection with the sale of companies that own and operate real estate in each jurisdiction in which the Investments are located (which may include the proration and apportionment of any revenues and expenses of the Investments). |
In the event of a dispute with respect to any of the adjustments and prorations to be made pursuant to this Section 9.2(c)(iv), each of the Initiator and the Recipient(s) shall submit to an shall submit to an arbitration pursuant to Section 9.4 of this Agreement. The arbitrator shall be limited to awarding only one or the other of the two adjustment proposals submitted. The decision of the arbitrator shall be final and binding on the Initiator and the Recipient(s).
57
or ROFR Deposit, as applicable and the Recipient(s) shall reimburse the Initiator for the reasonable third- party, out-of-pocket costs actually incurred and paid by the Initiator in connection with the exercise of the relevant ROFO Election or ROFR Election, as applicable. Thereafter, the Initiator (1) may pursue and in accordance with Section 9.2(d) cause the consummation of the Forced Sale described in the Force Sale Notice or ROFR Notice, as applicable and/or any other sale to an Unrelated Third Party for a cash price and such other terms and conditions as are determined by the Initiator in its sole discretion (without regard to the Proposed Portfolio Price or the Proposed Purchase Price, as applicable) for an unrestricted period and without any obligation to give any notices of such sale (including any Forced Sale Notice, it being agreed that Section 9.2(b) and this Section 9.2(c) shall no longer be applicable to such sale) or (2) may elect to purchase the Interests of the Recipient(s) for a price equal to the amount that would be distributed to the Recipient(s) pursuant to Section 5.2 above (after giving effect to all applicable provisions of this Agreement, but after liquidating all reserves then existing and without establishing any additional reserves) if all of the property to be sold as identified in the ROFO Notice or ROFR Notice, as applicable, were sold on the date of such notice for a gross sales price equal to ninety-eight percent (98%) of the Proposed Portfolio Price or Proposed Purchase Price, as applicable, and all liabilities and obligations of the Partnership and any Investment Entity (excluding contingent liabilities) were satisfied from the proceeds from such sales price, any remaining proceeds were distributed to the Partners in accordance with Section 5.2. Further, thereafter, the Recipient(s) shall
58
(d) | Terms Applicable to Forced Sale. |
59
proposed to be taken with respect to such sale process, (III) the Initiator shall provide the Recipient(s) with all communications made or received by a third party with respect to such sale process and (IV) the Initiator shall not take any action that the Recipient(s) determines, acting in good faith, would result in a reduction in the value of the Partnership, any Investment Entity or the Portfolio or would make the assets of the Partnership or the Investment Entities or the Portfolio less marketable.
60
ARTICLE 10.
DISSOLUTION AND LIQUIDATION OF THE PARTNERSHIP
10.1 | Events Causing Dissolution. |
(i) | the bankruptcy of the Partnership; |
61
nominee or designee to the Partnership as a limited partner, effective as of the occurrence of the event that caused the last remaining limited partner to cease to be a limited partner or (B) within ninety (90) days after the occurrence of the event that caused the last remaining limited partner to cease to be a limited partner, a Person is admitted to the Partnership as a limited partner by the General Partner (and the General Partner is hereby authorized to effect such admission), effective as of the occurrence of the event that caused the last remaining limited partner to cease to be a limited partner; or
(vii) | the expiration of the Term. |
Dissolution of the Partnership shall be effective on the day on which the event occurs giving rise to the dissolution. The Partnership shall not terminate until the assets of the Partnership shall have been liquidated as provided in Section 10.2 and all proceeds therefrom have been collected. Notwithstanding the dissolution of the Partnership, prior to the termination of the Partnership, as aforesaid, the business of the Partnership and the affairs of the Partners as such, shall continue to be governed by this Agreement.
10.2 | Liquidation. |
(i) | to the payment of the expenses of the liquidation; |
(iv) | to the Partners, in accordance with Section 5.2. |
62
(10) Business Days prior to any proposed in-kind distribution of assets, the General Partner shall notify the Limited Partners and the Special Limited Partner that it intends to make such a distribution, which notice shall specify the assets intended to be included within such distribution. The valuation of any assets proposed to be distributed in-kind must be approved by Approval of the Executive Committee.
ARTICLE 11.
BOOKS AND RECORDS, ACCOUNTING, REPORTS, TAX ELECTIONS, ETC.
11.1 | Books and Records. |
63
and any appraisal reports obtained by the Partnership; (iii) to have a current list of the name and last known business, residence or mailing address of each Partner mailed to the Limited Partners or their respective representatives; (iv) to have true and full information regarding the amount of cash and a description and statement of the value of any property or services contributed to the Partnership as of the date upon which each Partner became a Partner; and (v) to have a copy of this Agreement, the Certificate of Limited Partnership and all amendments or certificates of amendment, as the case may be, thereto, together with copies of any powers of attorney pursuant to which any such amendment or certificate of amendment has been executed.
(c) | Reports. |
11.3 | Bank Accounts and Investment. |
64
course of Partnership business in accordance with this Agreement on such signature or signatures as the General Partner may determine. All deposits and other funds not needed in the operation of the business or not yet invested may be invested in U.S. government securities, securities issued or guaranteed by U.S. government agencies, securities issued or guaranteed by states or municipalities, certificates of deposit and time or demand deposits in commercial banks, savings and loan association deposits or bankers’ acceptances. The funds of the Partnership shall not be commingled with the funds of any other Person (including the General Partner or any Affiliate of the General Partner).
11.4 | Tax Depreciation and Elections. |
ARTICLE 12.
MISCELLANEOUS
65
Notwithstanding anything to the contrary in this Agreement (including, without limitation, the provisions of Sections 6.7 and 6.8), no Person shall be entitled to recover (or be indemnified for) any Losses which are special, punitive, indirect, or consequential in nature.
12.3 | Appointment of General Partner as Attorney-in-Fact. |
12.4 | Amendments. |
66
General Partner (including, without limitation, executing this Agreement or such other instrument or instruments as the General Partner reasonably shall determine) to reflect such Person’s adoption of, and agreement to be bound by all the provisions of, this Agreement.
12.7 | Representations and Warranties of the General Partner. |
67
authorized and qualified to enter into and to perform fully all of its obligations arising under this Agreement and the Person signing this Agreement on behalf of the General Partner has been duly authorized by such entity to do so.
68
Partner recognizes that reliance upon such exemptions is based in part upon the representations of such Partner contained in this Agreement. Such Partner represents and warrants that the Interests will be acquired by such Partner solely for the account of such Partner, for investment purposes only and not with a view to the distribution thereof. Such Partner represents and warrants that such Partner (i) is a sophisticated investor with the knowledge and experience in business and financial matters to enable such Partner to evaluate the merits and risks of an investment in the Partnership, is able to bear the economic risk and lack of liquidity of an investment in the Partnership and is able to bear the risk of loss of its entire investment in the Partnership.
69
70
Interests, and such Partner shall have no claim, and shall not pursue any claim, against the Partnership, the General Partner or any other Person in connection therewith.
(x) the Partnership and the Investment Entities shall be deemed not to be Affiliates of the General Partner or any of its Affiliates and (y) neither the Special Limited Partner nor the BCIG Partners shall be deemed to be an Affiliate of the General Partner, the IPT Limited Partner, or any of their respective Affiliates); the terms “Control”, “Controlled by”, and “under common Control with” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through ownership of voting equity interests, by contract or otherwise; and “Unrelated Third Party” means, when used with reference to a specified Person, a Person who is not an “Affiliate” of or “Person Affiliated with” the specified Person.
71
12.11 | Confidentiality. |
(b) | QuadReal Specific Confidentiality Provisions. |
72
party by written agreement, it shall notify the General Partner in advance of such disclosure and shall only disclose such Confidential Information to the extent required by law or any court of competent jurisdiction or by written agreement between QuadReal and such Limited Partner and its equity owners.
73
contractors and any representatives thereof (collectively, the “QuadReal Parties”), in each case, only to the extent that any QuadReal Party reasonably needs to know such information in connection with the QuadReal Limited Partner’s investment in the Partnership; provided, that (A) the QuadReal Parties are informed of the confidential nature of the information and are subject to the confidentiality obligations set forth in Section 12.11(a), and (B) the QuadReal Limited Partner will be liable for any breach of the confidentiality obligations by the QuadReal Parties as if the QuadReal Limited Partner had itself breached such confidentiality obligations.
74
hereto and their respective successors, heirs, executors, administrators, legal representatives and permitted assigns.
75
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.
GENERAL PARTNER
IPT BTC II GP LLC, a Delaware limited liability company
By: IPT Real Estate Holdco LLC, a Delaware limited liability company, its sole member
By: Industrial Property Operating Partnership LP, a Delaware limited partnership, its sole member
By: Industrial Property Trust Inc., a Maryland corporation, its general partner
By: /s/ Thomas G. McGonagle
Name: Thomas G. McGonagle
Title: Chief Financial Officer
IPT LIMITED PARTNER
IPT BTC II GP LLC, a Delaware limited liability company
By: IPT Real Estate Holdco LLC, a Delaware limited liability company, its sole member
By: Industrial Property Operating Partnership LP, a Delaware limited partnership, its sole member
By: Industrial Property Trust Inc., a Maryland corporation, its general partner
By: /s/ Thomas G. McGonagle
Name: Thomas G. McGonagle
Title: Chief Financial Officer
SPECIAL LIMITED PARTNER
Industrial Property Advisors Sub IV LLC, a Delaware limited liability company
By: Industrial Property Advisors LLC, a Delaware limited liability company, its sole member
By: Industrial Property Advisors Group LLC, a Delaware limited liability company, its sole member
By: /s/ Evan H. Zucker
Name: Evan H. Zucker
Title: Manager
BCIG LIMITED PARTNER
BCG BTC II Investors LLC, a Delaware limited liability company
By: /s/ Evan H. Zucker
Name: Evan H. Zucker
Title: Manager
QUADREAL WCBAF
bcIMC (WCBAF) Realpool Global Investment Corporation, a Canadian corporation
By: /s/ Stephen Barnett
Name: Stephen Barnett
Title: Sole Director
QUADREAL COLLEGE
bcIMC (College) US Realty Inc., a Canadian corporation
By: /s/ Stephen Barnett
Name: Stephen Barnett
Title: Sole Director
QUADREAL MUNICIPAL
bcIMC (Municipal) US Realty Inc., a Canadian corporation
By: /s/ Stephen Barnett
Name: Stephen Barnett
Title: Sole Director
QUADREAL PUBLIC SERVICE
bcIMC (Public Service) US Realty Inc., a Canadian corporation
By: /s/ Stephen Barnett
Name: Stephen Barnett
Title: Sole Director
QUADREAL TEACHERS
bcIMC (Teachers) US Realty Inc., a Canadian corporation
By: /s/ Stephen Barnett
Name: Stephen Barnett
Title: Sole Director
QUADREAL WCB
bcIMC (WCB) US Realty Inc., a Canadian corporation
By: /s/ Stephen Barnett
Name: Stephen Barnett
Title: Sole Director
QUADREAL HYDRO
bcIMC (Hydro) US Realty Inc., a Canadian corporation
By: /s/ Stephen Barnett
Name: Stephen Barnett
Title: Sole Director
QUADREAL US
QuadReal US Holdings Inc., a Canadian corporation
By: /s/ Jonathan Dubois-Phillips
Name: Jonathan Dubois-Phillips
Title: President, International Real Estate
Exhibit 10.6
FIRST AMENDMENT TO
AGREEMENT OF LIMITED PARTNERSHIP
OF BUILD-TO-CORE INDUSTRIAL PARTNERSHIP II LP
THIS FIRST AMENDMENT (this “Amendment”) to the Agreement of Limited Partnership of Build-To-Core Industrial Partnership II LP, a Delaware limited partnership (the “Partnership”), is entered into and shall be effective as of January 31, 2018 (the “Effective Date”), by and among (a) IPT BTC II GP LLC, a Delaware limited liability company, as general partner (the “General Partner”); (b) IPT BTC II LP LLC, a Delaware limited liability company, as a limited partner (the “IPT Limited Partner” and, together with the General Partner, collectively, the “IPT Partners”); (c) Industrial Property Advisors Sub IV LLC, a Delaware limited liability company (the “Special Limited Partner”), as a limited partner; (d) BCG BTC II Investors LLC, a Delaware limited liability company (the “BCIG Limited Partner”) , as a limited partner; (e) bcIMC (WCBAF) Realpool Global Investment Corporation, a Canadian corporation, as a limited partner (“QuadReal WCBAF”); (f) bcIMC (College) US Realty Inc., a Canadian corporation, as a limited partner (“QuadReal College”); (g) bcIMC (Municipal) US Realty Inc., a Canadian corporation, as a limited partner (“QuadReal Municipal”); (h) bcIMC (Public Service) US Realty Inc., a Canadian corporation, as a limited partner (“QuadReal Public Service”); (i) bcIMC (Teachers) US Realty Inc., a Canadian corporation, as a limited partner (“QuadReal Teachers”); (j) bcIMC (WCB) US Realty Inc., a Canadian corporation, as a limited partner (“QuadReal WCB”); (k) bcIMC (Hydro) US Realty Inc., a Canadian corporation, as a limited partner (“QuadReal Hydro”); and (l) QuadReal US Holdings Inc., a Canadian corporation, as a limited partner (“QuadReal US” and, together with QuadReal WCBAF, QuadReal College, QuadReal Municipal, QuadReal Public Service, QuadReal Teachers, QuadReal WCB and QuadReal Hydro, collectively, the “QuadReal Limited Partner”). QuadReal WCBAF, QuadReal College, QuadReal Municipal, QuadReal Public Service, QuadReal Teachers, QuadReal WCB, QuadReal Hydro, QuadReal US, the IPT Limited Partner and the BCIG Limited Partner shall each be referred to herein individually as a “Limited Partner” and collectively as the “Limited Partners” and the Limited Partners, the Special Limited Partner and the General Partner, each shall be referred to herein individually as a “Partner” and collectively as the “Partners.”
W I T N E S S E T H
WHEREAS, the General Partner executed the Certificate of Limited Partnership on May 18, 2017, and the Partners executed and agreed to the terms set forth in that certain Agreement of Limited Partnership of the Partnership dated as of May 19, 2017 (the “Partnership Agreement”); and
WHEREAS, the Partners desire to amend the Partnership Agreement to reflect additional Capital Commitments by the QuadReal Limited Partner, the IPT Limited Partner and the BCIG Limited Partner, to adjust the Percentage Interests of the Partners and to reflect certain other changes set forth herein.
NOW, THEREFORE, for and in consideration of the sum of Ten Dollars ($10), and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:
1. | Capitalized Terms. The capitalized terms used in this Amendment and not defined herein shall have the meanings ascribed to them in the Partnership Agreement. |
2. | Rejection of Proposed Investments. Notwithstanding any rejection by the QuadReal Limited Partner of any Proposed Investment prior to the date hereof, as of the Effective Date, the QuadReal Limited Partner shall be deemed not to have rejected any Proposed Investments for the purposes of determining whether the Identification Period has expired pursuant to Sections 4.1(a) and 6.6(c). |
3. | Increased Capital Commitments and Adjusted Percentage Interests. Schedule 1. Schedule 1 to the Partnership Agreement is hereby deleted in its entirety and replaced with Schedule 1 attached hereto. The increased Capital Commitments and adjusted Percentage Interests set forth on Schedule 1 shall apply for all purposes under the Partnership Agreement from and after the Effective Date. |
4. | Deletion of IPT Sell-Down. |
a. | The defined term “IPT Sell-Down” is hereby deleted from the Definitions. |
b. | The following proviso in the second sentence of Section 3.1 is hereby deleted in its entirety: “; provided that, following an IPT Sell-Down, the Executive Committee shall be comprised of three (3) members consisting of: (a) the IPT Representative; (b) the QuadReal Representative; and (c) one (1) Representative appointed by the Sell-Down Transferee.” |
c. | Section 4.4(d)(ii) is hereby deleted in its entirety and replaced with the following text: “If any QuadReal Limited Partner is a Defaulting Partner, the General Partner shall have no further obligation to present to the Partnership potential investments pursuant to Section 6.6.” |
d. | Sections 5.3(a)(i) and 5.3(b)(iii) in Exhibit J are hereby amended to delete the following text: “(and the Sell-Down Transferee, if applicable)”. |
e. | The first sentence of Section 6.3(e)(v) is hereby deleted in its entirety and replaced with the following text: “If the GP Appraiser, the LP Appraiser and the Independent Appraiser are appointed, the General Partner shall pay for the services of the GP Appraiser and the QuadReal Limited Partner shall pay for the services of the LP Appraiser and the cost of the services of the Independent Appraiser shall be paid by the Partners pro rata in accordance with their Percentage Interests.” |
f. | The last sentence of Section 6.4(c) is hereby deleted in its entirety and replaced with the following text: “Notwithstanding the foregoing, any costs or expenses incurred by the Partnership or a Subsidiary REIT in connection with establishing and maintaining the REIT status of such entity shall be borne entirely by the QuadReal Limited Partner.” |
g. | The second sentence of Section 6.4(d) is hereby amended to delete the words “or the Sell-Down Transferee”. |
h. | Section 8.1(e) is hereby deleted in its entirety from the Partnership Agreement and replaced with the following: “Intentionally omitted.” |
i. | Clause (iii) of Section 12.4(b) is hereby deleted in its entirety and replaced with the following: “intentionally omitted.” |
j. | Clause (i) of Section 12.11(a) is hereby amended to delete the following text: “(including in connection with the IPT Limited Partner’s right to exercise the IPT Sell-Down pursuant to Section 8.1(e)”. |
k. | Clauses (x) and (y) in the first sentence of the second paragraph of Section 7.4(b) in Exhibit M are hereby deleted in their entirety and replaced with the following text: “from the Substitute General Partner List”. |
l. | The following proviso in the second sentence of the second paragraph of Section 7.4(b) in Exhibit M is hereby deleted in its entirety: “; provided, that from and after the IPT Sell-Down and in the event the Oversight Party does not respond to a request for consent within ten (10) days of receipt, such request shall be deemed approved”. |
5. | Investment Markets. Exhibit B to the Partnership Agreement is hereby deleted in its entirety and replaced with Exhibit B attached hereto. The changes to Exhibit B are included in blackline format. Notwithstanding the changes to the Exhibit B set forth in this Amendment, the Partners hereby acknowledge that the San Antonio Logistics Investment located in San Antonio, Texas was made in compliance with the Partnership Agreement. |
6. | Development Management Fee. The Development Management Fee set forth on Exhibit D is hereby reduced to 4.0% of Total Managed Costs, but only with respect to each Approved Investment that is approved by the Executive Committee after the Effective Date. For the avoidance of doubt, the Development Management Fee for each Approved Investment that was approved by the Executive Committee prior to the Effective Date shall continue to equal 4.5% of Total Managed Costs. |
7. | Investment Silos. Section 2.2(a)(i)(C) is hereby deleted in its entirety and replaced with the following text: “comprised of approximately (I) seventy percent (70%) Development Investments, and (II) thirty percent (30%) Value-Add Investments and Core Investments in the aggregate (the foregoing clauses (I) and (II), each, an “Investment Silo”); provided, however, any Approved Investment that would exceed the foregoing allocation for either Investment Silo shall reduce the allocation for the other Investment Silo;” |
8. | General Partner Reporting and Valuation. |
a. | Exhibit H to the Partnership Agreement is hereby deleted in its entirety and replaced by Exhibit H attached hereto. |
b. | In addition to the reports set forth on Exhibit H to the Partnership Agreement, the General Partner will use commercially reasonable efforts to provide the QuadReal |
Limited Partner with additional reporting as may be reasonably requested of the General Partner from time to time. |
c. | The following is hereby inserted at the end of Section 5.2 in Exhibit J to the Partnership Agreement, as Section 5.2(d): |
“(d)Notice of Distributions. Each distribution made pursuant to this Section 5.2 shall be accompanied by a notice from the General Partner to the Limited Partners setting forth (i) the date such distribution is made, (ii) the amounts of such distribution attributable to operations and to sales, financings or other capital transactions, and (iii) the amounts of such distribution being made to each of the Partners.”
d. | Section 6.3(e)(i) is hereby deleted in its entirety and replaced with the following: |
“(i)The General Partner shall cause the Investments to be valued and appraised as set for on Exhibit H attached hereto. As used in this Agreement, “Qualified Appraiser” shall mean an appraiser meeting all the following criteria: (A) is a reputable and independent appraiser in QuadReal Limited Partner’s reasonable discretion; (B) is certified as an MAI and/or RICS appraiser; (C) is authorized to practice as an appraiser under the law of the State or Territory where the valuation takes place; (D) has at least five (5) years of continuous experience in valuation of the type of property to be valued; (E) is not an Affiliate of any Partner and is not in any kind of (perceived or real) conflict of interest; and (F) does not have a pecuniary interest that could conflict with the proper valuation of the property; provided, however, for the avoidance of doubt, with respect to the foregoing clauses (E) and (F), no conflict shall be presumed to exist solely because an appraiser has been retained for other work by an Affiliate of IPT, an Affiliate of BCG or an entity sponsored or advised by an Affiliate of BCG.
9. | Allocation Policy. |
a. | Exhibit O to the Partnership Agreement is hereby deleted in its entirety and replaced with Exhibit O attached hereto. The changes to Exhibit O are included in blackline format. |
b. | Section 6.6(b)(i) is hereby deleted in its entirety and replaced with the following text: “The Partnership will have the first option to pursue all potential investments that qualify as Development Investments identified by BCIG Affiliates through March 31, 2018, and thereafter one out of every three potential Development Investments shall be allocated to the Partnership.” |
c. | Section 6.6(b)(ii) is hereby deleted in its entirety and replaced with the following text: “Potential investments identified by BCIG Affiliates that qualify as Value-Add Investments shall be allocated among the Applicable Vehicles pursuant to the Allocation Policy.” |
d. | Section 6.6(b)(iii) is hereby deleted in its entirety and replaced with the following text: “Potential investments identified by BCIG Affiliates that qualify as Core Investments shall be allocated among the Applicable Vehicles pursuant to the Allocation Policy.” |
10. | Responsible Investment Policy. |
a. | The following is hereby inserted at the end of Exhibit L to the Partnership Agreement as Section 6.6(d): |
“(d)Responsible Investment Policy. The IPT Partners acknowledge that the QuadReal Limited Partner has informed the IPT Partners that it is bound by a responsible investment policy as set forth on Exhibit P attached hereto (the “Responsible Investment Policy”). The QuadReal Limited Partner may, from time to time, update the Responsible Investment Policy, a copy of which will be provided to the IPT Partners. Except as otherwise approved by the Executive Committee, to the extent practicable, reasonable and applicable, the General Partner will in good faith take into account the Responsible Investment Policy when acquiring an Investment. The General Partner agrees to send to the QuadReal Limited Partner an annual report certifying that the General Partner has complied with the provisions of the preceding sentence in connection with the General Partner’s actions related to the Partnership during the period since the last such report.”
b. | Exhibit P attached hereto is hereby inserted in the Partnership Agreement as Exhibit P to the Partnership Agreement. |
11. | Anti-Terrorism, Money Laundering and Anti-Corruption Provisions. Section 12.8(l) of the Partnership Agreement is hereby amended to provide that, in addition to the statutes referenced therein, the Partners shall also comply with the following statutes: the Corruption of Foreign Public Officials Act (Canada); the Foreign Corrupt Practices Act of 1977 (United States); the Bribery Act (UK) or other similar laws of other jurisdictions; the Special Economic Measures Act (Canada) or other similar laws of other jurisdictions; and the Freezing Assets of Corrupt Foreign Public Officials Act (Canada). |
12. | Entire Agreement. The Partnership Agreement, as amended by this Amendment, constitutes the entire agreement between the Partners and supersedes any prior agreements or understandings between them with respect to the subject matter thereof. |
13. | Full Force and Effect. Except as expressly amended hereby, the Partnership Agreement shall remain in full force and effect. |
14. | Binding Effect. Except as otherwise provided in this Amendment, every covenant, term and provision of the Partnership Agreement, as amended by this Amendment, shall be binding upon and inure to the benefit of the Partners and their respective successors, transferees and assigns. |
15. | Headings. Section and other headings contained in this Amendment are for reference purposes only and are not intended to describe, interpret, define or limit the scope, extent or intent of this Amendment or any provision hereof. |
16. | Severability. Every provision of this Amendment is intended to be severable. If any term or provision hereof is illegal or invalid for any reason whatsoever, such illegality or invalidity shall not affect the legality or validity of the remainder of this Amendment. |
17. | Construction. Every covenant, term and provision of this Amendment shall be construed simply according to its fair meaning and not strictly for or against any Partner. |
18. | Further Action. Each Partner, upon the request of the General Partner, agrees to perform all further acts and execute, acknowledge and deliver any documents which may be reasonably necessary, appropriate or desirable to carry out the provisions of this Amendment. |
19. | Incorporation by Reference. Every exhibit referred to herein is hereby incorporated in this Amendment by reference. |
20. | Applicable Law Notwithstanding the place where this Amendment may be executed by any of the parties hereto, this Amendment, the rights and obligations of the parties hereto, and any claims and disputes relating thereto shall be subjected to and governed by the Act and the other laws of the State of Delaware as applied to agreements among Delaware residents to be entered into and performed entirely within the State of Delaware, and such laws shall govern all aspects of this Amendment, including, without limitation, the limited partnership aspects of this Amendment. |
21. | Counterpart Execution. This Amendment may be executed in any number of counterparts, and each such counterpart shall be deemed to be an original instrument, but all such counterparts together shall constitute but one agreement. This Amendment may be delivered by one or more parties by facsimile or similar electronic transmission device pursuant to which the signature of or on behalf of such party can be seen, and such execution and delivery shall be considered valid, binding and effective for all purposes. |
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the Effective Date.
GENERAL PARTNER
IPT BTC II GP LLC, a Delaware limited liability
company
By: IPT Real Estate Holdco LLC, a Delaware
limited liability company, its sole member
By: Industrial Property Operating Partnership LP, a
Delaware limited partnership, its sole member
By: Industrial Property Trust Inc., a Maryland
Corporation, its general partner
By:/s/ THOMAS G. MCGONAGLE
Name:Thomas G. McGonagle
Title:Chief Financial Officer
IPT LIMITED PARTNER
IPT BTC II LP LLC, a Delaware limited liability
company
By: IPT Real Estate Holdco LLC, a Delaware
limited liability company, its sole member
By: Industrial Property Operating Partnership LP, a
Delaware limited partnership, its sole member
By: Industrial Property Trust Inc., a Maryland
Corporation, its general partner
By:/s/ THOMAS G. MCGONAGLE________
Name: Thomas G. McGonagle
Title: Chief Financial Officer
SPECIAL LIMITED PARTNER
Industrial Property Advisors Sub IV LLC, a
Delaware limited liability company
By: Industrial Property Advisors LLC, a Delaware
limited liability company, its sole member
By: Industrial Property Advisors Group LLC, a
Delaware limited liability company, its sole
member
By:/s/ EVAN H. ZUCKER_________________
Name: Evan H. Zucker
Title: Manager
BCIG LIMITED PARTNER
BCG BTC II Investors LLC, a Delaware limited
liability company
By:/s/ EVAN H. ZUCKER_________________
Name: Evan H. Zucker
Title: Manager
QUADREAL WCBAF
bcIMC (WCBAF) Realpool Global Investment
Corporation, a Canadian corporation
By:/s/ JONATHAN DUBOIS-PHILLIPS
Name: Jonathan Dubois-Phillips
Title: Chair of the Board
QUADREAL COLLEGE
bcIMC (College) US Realty Inc., a Canadian
corporation
By:/s/ JONATHAN DUBOIS-PHILLIPS
Name: Jonathan Dubois-Phillips
Title: Chair of the Board
QUADREAL MUNICIPAL
bcIMC (Municipal) US Realty Inc., a Canadian
corporation
By:/s/ JONATHAN DUBOIS-PHILLIPS
Name: Jonathan Dubois-Phillips
Title: Chair of the Board
QUADREAL PUBLIC SERVICE
bcIMC (Public Service) US Realty Inc., a Canadian
corporation
By:/s/ JONATHAN DUBOIS-PHILLIPS
Name: Jonathan Dubois-Phillips
Title: Chair of the Board
QUADREAL TEACHERS
bcIMC (Teachers) US Realty Inc., a Canadian
corporation
By:/s/ JONATHAN DUBOIS-PHILLIPS
Name: Jonathan Dubois-Phillips
Title: Chair of the Board
QUADREAL WCB
bcIMC (WCB) US Realty Inc., a Canadian
corporation
By:/s/ JONATHAN DUBOIS-PHILLIPS
Name: Jonathan Dubois-Phillips
Title: Chair of the Board
QUADREAL HYDRO
bcIMC (Hydro) US-Realty Inc., a Canadian
corporation
By:/s/ JONATHAN DUBOIS-PHILLIPS
Name: Jonathan Dubois-Phillips
Title: Chair of the Board
QUADREAL US
QuadReal US Holdings Inc., a Canadian
corporation
By:/s/ JONATHAN DUBOIS-PHILLIPS
Name: Jonathan Dubois-Phillips
Title: Chair of the Board
EXHIBIT 10.7
SECOND AMENDMENT TO
AGREEMENT OF LIMITED PARTNERSHIP
OF BUILD-TO-CORE INDUSTRIAL PARTNERSHIP II LP
THIS SECOND AMENDMENT (this “Amendment”) to the Agreement of Limited Partnership of Build-To-Core Industrial Partnership II LP, a Delaware limited partnership (the “Partnership”), is entered into and shall be effective as of May 10, 2019 (the “Effective Date”), by and among (a) IPT BTC II GP LLC, a Delaware limited liability company, as general partner (the “General Partner”); (b) IPT BTC II LP LLC, a Delaware limited liability company, as a limited partner (the “IPT Limited Partner” and, together with the General Partner, collectively, the “IPT Partners”); (c) Industrial Property Advisors Sub IV LLC, a Delaware limited liability company (the “Special Limited Partner”), as a limited partner; (d) BCG BTC II Investors LLC, a Delaware limited liability company (the “BCIG Limited Partner”), as a limited partner; (e) QR Master Holdings USA II LP, a limited partnership formed under the laws of the Province of Manitoba (“QuadReal Master Holdings”); and (f) QuadReal US Holdings Inc., a Canadian corporation, as a limited partner (“QuadReal US” and, together with QuadReal Master Holdings (the “QuadReal Limited Partner”). The QuadReal Limited Partner, the IPT Limited Partner and the BCIG Limited Partner shall each be referred to herein individually as a “Limited Partner” and collectively as the “Limited Partners” and the Limited Partners, the Special Limited Partner and the General Partner, each shall be referred to herein individually as a “Partner” and collectively as the “Partners.”
W I T N E S S E T H
WHEREAS, the General Partner executed the Certificate of Limited Partnership on May 18, 2017, and the Partners (including the Original QuadReal Limited Partners as predecessors-in-interest to QuadReal Master Holdings) executed and agreed to the terms set forth in that certain Agreement of Limited Partnership of the Partnership dated as of May 19, 2017 (the “Original Partnership Agreement”); and
WHEREAS, the Partners (including the Original QuadReal Limited Partners as predecessors-in-interest to QuadReal Master Holdings) amended the Original Partnership Agreement pursuant to that certain First Amendment to the Agreement of Limited Partnership dated as of January 31, 2018 (the “First Amendment”, and together with the Original Partnership Agreement, the “Partnership Agreement”); and
WHEREAS, on April 1, each of (a) bcIMC (WCBAF) Realpool Global Investment Corporation, a Canadian corporation, as a limited partner (“QuadReal WCBAF”); (b) bcIMC (College) US Realty Inc., a Canadian corporation, as a limited partner (“QuadReal College”); (c) bcIMC (Municipal) US Realty Inc., a Canadian corporation, as a limited partner (“QuadReal Municipal”); (d) bcIMC (Public Service) US Realty Inc., a Canadian corporation, as a limited partner (“QuadReal Public Service”); (e) bcIMC (Teachers) US Realty Inc., a Canadian corporation, as a limited partner (“QuadReal Teachers”); (f) bcIMC (WCB) US Realty Inc., a Canadian corporation, as a limited partner (“QuadReal WCB”); and (g) bcIMC (Hydro) US Realty Inc., a Canadian corporation, as a limited partner (“QuadReal Hydro” and, together with QuadReal WCBAF, QuadReal College, QuadReal Municipal, QuadReal Public Service, QuadReal Teachers, and QuadReal WCB, collectively, the “Original QuadReal Limited
1
Partners”) completed an internal reorganization and assigned their respective interest in the Partnership to the QuadReal Master Holdings; and
WHEREAS, the Partners desire to further amend the Partnership Agreement to reflect the changes set forth herein.
NOW, THEREFORE, for and in consideration of the sum of Ten Dollars ($10), and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:
1. | Capitalized Terms. The capitalized terms used in this Amendment and not defined herein shall have the meanings ascribed to them in the Partnership Agreement. |
2. | Rejection of Proposed Investments; Investment Period. The Partners acknowledge that as of May 16, 2018, the QuadReal Representative has rejected at least three (3) Proposed Investments presented pursuant to Sections 4.1 and 6.6(c), and that the Identification Period has terminated. Notwithstanding Section 4.1 or the foregoing sentence: |
a. | The General Partner hereby acknowledges that the Partnership continues to be in the rotation for Value-Add Investments and Development Investments set forth in the Allocation Policy, and the General Partner shall continue to recommend, on a rotation basis pursuant to the Allocation Policy and Section 6.6(b), Proposed Investments to the Executive Committee in the Target Markets that provide for a LAFIRR (as defined in Exhibit B attached hereto) equal to at least the minimum LAFIRR set forth on Exhibit B for the Target Market in which the Proposed Investment is located (the “Minimum LAFIRR”) pursuant to Sections 4.1(b); provided, however the General Partner may elect to either (i) continue, in its sole discretion, presenting Proposed Investments to the Executive Committee in accordance with the Allocation Policy, but cease compliance with Section 6.6(b), or (ii) cease presenting any Proposed Investments to the Executive Committee, in either case at any time, and for any reason or no reason; provided, further, the General Partner shall provide written notice to the Executive Committee of its election under clause (i) (an “End of Formal Allocation Notice”) or clause (ii) (a “Cessation Notice”); and |
b. | For the avoidance of doubt, from and after the expiration of the Investment Period, the Partners shall continue to be obligated to fund, pro rata based on their Percentage Interests, Capital Contributions with respect to Capital Call Notices issued to fund activities described in Section 4.3(b)(ii), and other investment activities of the Partnership expressly Approved by the Executive Committee prior to the expiration of the Investment Period. |
c. | The definition of “Investment Period” is hereby deleted in its entirety and replaced with the following text “the period commencing on the Effective Date and ending on the date that is twelve (12) months after the date that the General Partner provided written notice to the Executive Committee of its election to cease presenting Proposed Investments to the Executive Committee.” |
3. | Pursuit Costs for Proposed Investments. |
2
a. | Notwithstanding anything in the Partnership Agreement, including Sections 4.1(b), 4.1(c) or 6.3(c) to the contrary, but subject to Section 2(b) above, the Partners agree that so long as the General Partner has not given an End of Formal Allocation Notice or a Cessation Notice, the General Partner shall be permitted to incur pursuit costs and expenses, including without limitation, costs and expenses of due diligence, legal fees and other costs and expenses incurred in connection with pursuing a Proposed Investment as a Partnership Expense, in an amount not to exceed $150,000.00 per Proposed Investment prior to it becoming an Approved Investment; provided, however, the aggregate amount of pursuit costs incurred with respect to Proposed Investments that do not subsequently become Approved Investments in a particular year may not exceed the amount allocated to dead deal costs in the then-current Approved Partnership Budget for such year; provided, further, the General Partner shall only be reimbursed for pursuit costs for a Proposed Investment if the initial underwriting for the Proposed Investment provides for a LAFIRR equal to at least the Minimum LAFIRR. For the avoidance of doubt, if pursuit costs are expended for a Proposed Investment that subsequently becomes an Approved Investment, then the amount of the pursuit costs incurred in connection with such investment shall not be included in the calculation of aggregate pursuit costs for Proposed Investments for the applicable year or be included in the dead deal costs for the then-current Approved Budget. |
b. | If the Partnership incurs pursuit costs for a Proposed Investment, and the Executive Committee rejects such Proposed Investment pursuant to Section 4.1, then the Proposed Investment may be offered to an Applicable Vehicle in accordance with the Allocation Policy; provided, however, if such Applicable Vehicle pursues such Proposed Investment, then (i) the Partnership shall assign all contracts and other due diligence materials in its possession or control with respect to such Proposed Investment to such Applicable Vehicle, and (ii) such Applicable Vehicle shall reimburse the Partnership for any pursuit costs actually incurred with respect to such Proposed Investment. |
4. | Investment Markets. Exhibit B to the Partnership Agreement is hereby deleted in its entirety and replaced with Exhibit B attached hereto. |
5. | Allocation Policy. Exhibit O to the Partnership Agreement is hereby deleted in its entirety and replaced with Exhibit O attached hereto. |
6. | Entire Agreement. The Partnership Agreement, as amended by this Amendment, constitutes the entire agreement between the Partners and supersedes any prior agreements or understandings between them with respect to the subject matter thereof. |
7. | Full Force and Effect. Except as expressly amended hereby, the Partnership Agreement shall remain in full force and effect. |
8. | Binding Effect. Except as otherwise provided in this Amendment, every covenant, term and provision of the Partnership Agreement, as amended by this Amendment, shall be binding upon and inure to the benefit of the Partners and their respective successors, transferees and assigns. |
3
9. | Headings. Section and other headings contained in this Amendment are for reference purposes only and are not intended to describe, interpret, define or limit the scope, extent or intent of this Amendment or any provision hereof. |
10. | Severability. Every provision of this Amendment is intended to be severable. If any term or provision hereof is illegal or invalid for any reason whatsoever, such illegality or invalidity shall not affect the legality or validity of the remainder of this Amendment. |
11. | Construction. Every covenant, term and provision of this Amendment shall be construed simply according to its fair meaning and not strictly for or against any Partner. |
12. | Further Action. Each Partner, upon the request of the General Partner, agrees to perform all further acts and execute, acknowledge and deliver any documents which may be reasonably necessary, appropriate or desirable to carry out the provisions of this Amendment. |
13. | Incorporation by Reference. Every exhibit referred to herein is hereby incorporated in this Amendment by reference. |
14. | Applicable Law Notwithstanding the place where this Amendment may be executed by any of the parties hereto, this Amendment, the rights and obligations of the parties hereto, and any claims and disputes relating thereto shall be subjected to and governed by the Act and the other laws of the State of Delaware as applied to agreements among Delaware residents to be entered into and performed entirely within the State of Delaware, and such laws shall govern all aspects of this Amendment, including, without limitation, the limited partnership aspects of this Amendment. |
15. | Counterpart Execution. This Amendment may be executed in any number of counterparts, and each such counterpart shall be deemed to be an original instrument, but all such counterparts together shall constitute but one agreement. This Amendment may be delivered by one or more parties by facsimile or similar electronic transmission device pursuant to which the signature of or on behalf of such party can be seen, and such execution and delivery shall be considered valid, binding and effective for all purposes. |
4
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the Effective Date.
|
GENERAL PARTNER IPT BTC II GP LLC, a Delaware limited liability company By: IPT Real Estate Holdco LLC, a Delaware limited liability company, its sole member By: Industrial Property Operating Partnership LP, a Delaware limited partnership, its sole member By: Industrial Property Trust Inc., a Maryland Corporation, its general partner By: /s/ DWIGHT L. MERRIMAN Name:Dwight L. Merriman III Title:Chief Executive Officer |
5
|
IPT LIMITED PARTNER IPT BTC II LP LLC, a Delaware limited liability Company By: IPT Real Estate Holdco LLC, a Delaware limited liability company, its sole member By: Industrial Property Operating Partnership LP, a Delaware limited partnership, its sole member By: Industrial Property Trust Inc., a Maryland Corporation, its general partner By: /s/ DWIGHT L. MERRIMAN Name:Dwight L. Merriman III Title:Chief Executive Officer |
6
|
SPECIAL LIMITED PARTNER Industrial Property Advisors Sub IV LLC, a Delaware limited liability company By: Industrial Property Advisors LLC, a Delaware limited liability company, its sole member By: Industrial Property Advisors Group LLC, a Delaware limited liability company, its sole member By: /s/ EVAN H. ZUCKER Name:Evan H. Zucker Title:Manager |
7
|
BCIG LIMITED PARTNER BCG BTC II Investors LLC, a Delaware limited liability company By: /s/ EVAN H. ZUCKER Name:Evan H. Zucker Title:Manager |
8
|
QUADREAL LIMITED PARTNER QR Master Holdings USA II LP, a Manitoba limited partnership By: QR USA GP Inc., its general partner By: /s/ JONATHAN DUBOIS-PHILLIPS Name: Jonathan Dubois-Phillips Title: Authorized Signatory |
9
|
QUADREAL US QuadReal US Holdings Inc., a Canadian corporation By: /s/ JONATHAN DUBOIS-PHILLIPS Name: Jonathan Dubois-Phillips Title: Authorized Signatory |
10
Exhibit 10.8
THIRD AMENDMENT TO AGREEMENT OF LIMITED PARTNERSHIP
OF BUILD-TO-CORE INDUSTRIAL PARTNERSHIP II LP
THIS THIRD AMENDMENT (this “Amendment”) to the Agreement of Limited Partnership of Build-to-Core Industrial Partnership II LP, a Delaware limited partnership (the “Partnership”), in entered into as of July 15, 2020 by IPT BTC II GP LLC, a Delaware limited liability company, in its capacity as general partner of the Partnership (the “General Partner”).
W I T N E S S E T H
WHEREAS, the Partners executed and agreed to the terms set forth in that certain Agreement of Limited Partnership of the Partnership, dated as of May 19, 2017, as amended by that certain First Amendment to Agreement of Limited Partnership of the Partnership, dated as of January 31, 2018, as amended by that certain Second Amendment to Agreement of Limited Partnership of the Partnership, dated as of May 15, 2019 (collectively, the “Partnership Agreement”);
WHEREAS, the General Partner is a subsidiary of IPT Real Estate Holdco LLC (“IPT HoldCo”), which in turn is a subsidiary of Industrial Property Operating Partnership LP (“IPT OpCo”), which in turn is a subsidiary of Industrial Property Trust (“IPT”);
WHEREAS, it is proposed that IPT OpCo would sell to BCI IV Portfolio Real Estate Holdco LLC (“BCI IV HoldCo”) all of its interests in IPT Holdco, which sale would include all of the indirect interests of IPT in the Partnership (such sale, the “Interest Sale”);
WHEREAS, BCI IV HoldCo is a subsidiary of BCI IV Operating Partnership LP (“BCI IV OpCo”), which in turn is a subsidiary of Black Creek Industrial REIT IV Inc. (“BCI IV”);
WHEREAS, the Interest Sale is a permitted transfer under the terms of the Partnership Agreement;
WHEREAS, in connection with the Interest Sale, and pursuant to its authority set forth in Section 12.4(b)(i) of the Partnership Agreement to unilaterally amend the Partnership Agreement to make changes of a ministerial nature which do not materially or adversely affect the rights of the Limited Partners or the Special Limited Partner, the General Partner desires to amend the Partnership Agreement to reflect the new indirect ownership structure of the Partnership resulting from the Interest Sale; and
WHEREAS, the Executive Committee of the Partnership has consented to and approved this Amendment and authorized the General Partner to execute and adopt this Amendment.
NOW, THEREFORE, for and in consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are acknowledged hereby, the Partnership hereby agrees to adopt the following amendments to the Partnership Agreement:
a. | All references in the Partnership Agreement to “IPT” (including in the name of any defined terms) are hereby deleted in their entirety and replaced with “BCI IV.” |
b. | All references in the Partnership Agreement to “IPT OpCo” are hereby deleted in their entirety and replaced with “BCI IV OpCo.” |
c. | All references in the Partnership Agreement to “IPT Holdco” are hereby deleted in their entirety and replaced with “BCI IV Holdco.” |
3. | New Defined Terms. The Partnership Agreement is hereby amended by adding to the Partnership Agreement each of the below terms following the first instance of use of each such term in the Partnership Agreement (as amended hereby): |
“BCI IV” means Black Creek Industrial REIT IV Inc., a Maryland corporation.
“BCI IV HoldCo” means BCI IV Portfolio Real Estate Holdco LLC, a Delaware limited liability company, which is a subsidiary of BCI IV OpCo.
“BCI IV OpCo” means BCI IV Operating Partnership LP, a Delaware limited partnership, which is a subsidiary of BCI IV.
4. | Effective Time. This Amendment shall be deemed effective upon the consummation of the Interest Sale. |
5. | Entire Agreement. The Partnership Agreement, as amended by this Amendment, constitutes the entire agreement between the Partners and supersedes any prior agreements or understandings between them with respect to the subject matter thereof. |
6. | Full Force and Effect. Except as expressly amended hereby, the Partnership Agreement shall remain in full force and effect. |
7. | Binding Effect. Except as otherwise provided in this Amendment, every covenant, term and provision of the Partnership Agreement, as amended by this Amendment, shall be binding upon and inure to the benefit of the Partners and their respective successors, transferees and assigns. |
8. | Headings. Section and other headings contained in this Amendment are for reference purposes only and are not intended to describe, interpret, define or limit the scope, extent or intent of this Amendment or any provision hereof. |
9. | Severability. Every provision of this Amendment is intended to be severable. If any term or provision hereof is illegal or invalid for any reason whatsoever, such illegality or invalidity shall not affect the legality or validity of the remainder of this Amendment. |
10. | Construction. Every covenant, term and provision of this Amendment shall be construed simply according to its fair meaning and not strictly for or against any Partner. |
11. | Further Action. Each Partner, upon the request of the General Partner, agrees to perform all further acts and execute, acknowledge and deliver any documents which may be reasonably necessary, appropriate or desirable to carry out the provisions of this Amendment. |
12. | Applicable Law. Notwithstanding the place where this Amendment may be executed by any of the parties hereof, this Amendment, the rights and obligations of the parties hereto, and any claims and disputes relating thereto shall be subjected to and governed by the Act and the other laws of the State of Delaware as applied to agreements among Delaware residents to be entered into and performed entirely within the State of Delaware, and such laws shall govern all aspects of this Amendment, including, without limitation, the limited partnership aspects of this Amendment. |
13. | Counterpart Execution. This Amendment may be executed in any number of counterparts, and each such counterpart shall be deemed to be an original instrument, but all such counterparts together shall constitute but one agreement. This Amendment may be delivered by one or more parties by facsimile or similar electronic transmission device pursuant to which the signature of or on behalf of such party can be seen, and such execution and delivery shall be considered valid, binding and effective for all purposes. |
IN WITNESS WHEREOF, the General Partner has executed this Amendment as of the date first above written.
GENERAL PARTNER
IPT BTC II GP LLC, a Delaware limited liability company
By:IPT Real Estate Holdco LLC, a Delaware limited liability company, its sole member
By:Industrial Property Operating Partnership LP, a Delaware limited partnership, its sole member
By:Industrial Property Trust, a Maryland real estate investment trust, its general partner
By: /s/ Thomas G. McGonagle
Name: Thomas G. McGonagle
Title: Chief Financial Officer
Exhibit 10.9
SECOND AMENDED AND RESTATED AGREEMENT
THIS SECOND AMENDED AND RESTATED AGREEMENT (this “Agreement”) is entered into this 15th day of September, 2016, by and among IPT BTC I GP LLC, a Delaware limited liability company (the “General Partner”), Industrial Property Advisors Sub I LLC, a Delaware limited liability company (the “Advisor Sub”), and, solely with respect to Section 1 and the third sentence of Section 3 hereof, Industrial Property Advisors LLC, a Delaware limited liability company (the “Advisor”). The General Partner is an indirect subsidiary of Industrial Property Trust Inc., a Maryland corporation (“IPT”).
RECITALS:
A.The General Partner and the Advisor entered into that certain Agreement, dated February 12, 2015 (the “Initial Agreement”).
B.The General Partner and the Advisor amended and restated the Initial Agreement pursuant to that certain Amended and Restated Agreement, dated as of April 10, 2015 (as amended pursuant to that certain Amendment No. 1 to Amended and Restated Agreement, and as further amended by that certain Amendment No. 2 to Amended and Restated Agreement, the “A&R Agreement”).
C.The General Partner is the general partner of Build-to-Core Industrial Partnership I LP, a Delaware limited partnership (the “Partnership”), and has entered into that certain Third Amended and Restated Agreement of Limited Partnership of the Partnership, dated as of the date hereof (the “Partnership Agreement”), by and among the General Partner, IPT BTC I LP LLC, a Delaware limited liability company, which is a subsidiary of IPT (the “IPT Limited Partner” and, together with the General Partner, collectively, the “IPT Partners”), the Advisor Sub, bcIMC International Real Estate (2004) Investment Corporation, a Canadian corporation, as a limited partner (the “BCIMC Pension Partner”), bcIMC (WCBAF) Realpool Global Investment Corporation, a Canadian corporation, as a limited partner (the “BCIMC Accident Fund Partner”), and bcIMC (USA) Realty Div A2 LLC, a Delaware limited liability company, as a limited partner (the “BCIMC USA Partner” and, together with the BCIMC Pension Partner and the BCIMC Accident Fund Partner, collectively, the “BCIMC Limited Partner” and, together with the IPT Partners and the Advisor Sub, collectively, the “Partners”).
D.The Partnership Agreement sets forth the terms pursuant to which the Partners intend to jointly invest in a portfolio of industrial properties located in major United States distribution markets. Any term with its initial letter capitalized and not otherwise defined herein shall have the meaning set forth in the Partnership Agreement.
E.Pursuant to Article 6 of the Partnership Agreement, the General Partner, in its capacity as General Partner, is obligated to provide or appoint others, including its affiliates, to provide the Partnership with day-to-day management services, including but not limited to acquisition and asset management services and, to the extent applicable with respect to certain Partnership investments, development and construction management, property management, leasing and disposition services. The Partnership has agreed to pay certain fees (the “Fees”) as compensation for providing the services to the Partnership (the “Services”) that are specifically
enumerated in Section 6.3(a) of the Partnership Agreement, other than any investment advisory services with respect to securities (“Investment Advisory Services”), including, where applicable, providing such services to the subsidiaries of the Partnership. The Fees are set forth in Exhibit D to the Partnership Agreement.
F.Pursuant to the Fourth Amended and Restated Advisory Agreement, dated as of August 12, 2016 (the “Advisory Agreement”), by and among IPT, Industrial Property Operating Partnership LP, a Delaware limited partnership (the “Operating Partnership”) and the Advisor, the Advisor provides acquisition and asset management services and, to the extent applicable with respect to certain of IPT’s investments, development and construction management, property management, leasing and disposition services to IPT and IPT’s subsidiaries. The General Partner does not and will not have any employees. Accordingly, the General Partner appointed the Advisor as the provider of the Services and assigned to the Advisor all the Fees associated therewith, except for the Guaranty Fee (such assigned Fees which exclude the Guaranty Fee referred to herein as the “Assigned Fees”), and the Advisor accepted such appointment and such assignment, in each instance as provided in the A&R Agreement.
G.The Advisor desires to assign, transfer and convey to the Advisor Sub all of the Advisor’s right, title and interest in and to and under the A&R Agreement, and the Advisor Sub desires to accept such assignment and to assume the Advisor’s obligations with respect to the A&R Agreement accruing on and after the date hereof, in each case, subject to the terms and conditions of this Agreement.
H.The General Partner, the Advisor and the Advisor Sub desire to amend and restate the A&R Agreement as set forth herein.
I.The General Partner acknowledges and agrees that one hundred percent (100%) of the Assigned Fees should be paid directly by the Partnership to the Advisor Sub, as the entity that shall provide the Services to the Partnership and its subsidiaries.
NOW THEREFORE, the General Partner, the Advisor (solely with respect to Section 1 and the third sentence of Section 3 hereof) and the Advisor Sub hereby agree as follows:
2
3
4
5
6
7
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first set forth above.
IPT BTC I GP LLC
By: IPT Real Estate Holdco LLC, a Delaware limited liability company, its sole member
By: Industrial Property Operating Partnership LP, a Delaware limited partnership, its sole member
By: Industrial Property Trust Inc., a Maryland corporation, its general partner
By: /s/ Thomas G. McGonagle
Thomas G. McGonagle
Chief Financial Officer
Industrial Property Advisors Sub I LLC
By: Industrial Property Advisors LLC, a Delaware limited liability company, its sole member
By: Industrial Property Advisors Group LLC, a Delaware limited liability company, its sole member
By: /s/ Evan H. Zucker
Evan H. Zucker
Manager
Industrial Property Advisors LLC
By: Industrial Property Advisors Group LLC, a Delaware limited liability company, its sole member
By: /s/ Evan H. Zucker
Evan H. Zucker
Manager
Exhibit 10.10
FIRST AMENDMENT TO AGREEMENT
THIS FIRST AMENDMENT (this “Amendment”) to the Second Amended and Restated Agreement, dated as of September 15, 2016 (the “Agreement”), by and between IPT BTC I GP LLC, a Delaware limited liability company (the “General Partner”), and Industrial Property Advisors Sub I LLC, a Delaware limited liability company (the “Advisor Sub”), is entered into as of July 15, 2020 by and among the General Partner and Advisor Sub.
RECITALS:
A. The General Partner is a subsidiary of IPT Real Estate Holdco LLC, a Delaware limited liability company (“IPT Holdco”), which is a subsidiary of Industrial Property Operating Partnership LP, a Delaware limited partnership (“IPT OP”), which is in turn a subsidiary of Industrial Property Trust, a Maryland real estate investment trust (“IPT”).
B.Pursuant to an Interest Purchase Agreement, entered into as of the date of this Amendment, by and between IPT OP and BCI IV Portfolio Real Estate Holdco LLC, a Delaware limited liability company (“BCI IV Holdco”), IPT OP will sell to BCI IV Holdco, and BCI IV Holdco will acquire, all of IPT OP’s interests in IPT Holdco (such transaction, the “Interest Sale”).
C.BCI IV Holdco is a subsidiary of BCI IV Operating Partnership LP, a Delaware limited partnership, which is in turn a subsidiary of Black Creek Industrial REIT IV Inc., a Maryland corporation (“BCI IV”).
D.In connection with the Interest Sale, in accordance with the terms of Section 12 of the Agreement, the parties hereto desire to, among other things, amend the Agreement to reflect the new indirect ownership structure of the General Partner resulting from the Interest Sale.
NOW THEREFORE, for and in consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are acknowledged hereby, the parties hereto agree as follows:
1. | Capitalized Terms. The capitalized terms used in this Amendment and not defined herein shall have the meanings ascribed to them in the Agreement. |
2. | Conforming Amendments. |
a. | All references in the Agreement to “IPT” (including in the name of any defined terms) are hereby deleted in their entirety and replaced with “BCI IV.” |
b. | Paragraph D of the Recitals in the Agreement is hereby deleted in its entirety and replaced with the following: |
Pursuant to the Amended and Restated Advisory Agreement (2020), dated as of June 12, 2020 (the “Advisory Agreement”), by and among BCI IV, BCI IV Operating Partnership LP, a Delaware limited partnership (the “Operating
1
Partnership”) and BCI IV Advisors LLC, a Delaware limited liability company (the “Advisor”), the Advisor provides acquisition and asset management services and, to the extent applicable with respect to certain of BCI IV’s investments, development and construction management, property management, leasing and disposition services to BCI IV and BCI IV’s subsidiaries. The General Partner does not and will not have any employees. Accordingly, the General Partner desires to appoint the Advisor Sub, an affiliate of the Advisor, as the provider of the Services and to assign to the Advisor Sub all the Fees associated therewith, except for the Guaranty Fee (such assigned Fees which exclude the Guaranty Fee referred to herein as the “Assigned Fees”), and the Advisor Sub desires to accept such appointment and such assignment.
c. | The reference to “Gary M. Reiff, Esq.” in Section 3 of the Agreement is hereby deleted in its entirety and replaced with “Josh Widoff, Esq.” |
d. | The reference to “Articles of Amendment and Restatement of IPT” in the first sentence of Section 18 of the Agreement is hereby deleted and replaced with “Third Articles of Amendment and Restatement of BCI IV.” |
3. | New Defined Term. The Agreement is hereby amended by adding to the Agreement the below term following the first instance of use of such term in the Agreement (as amended hereby): |
“BCI IV” means Black Creek Industrial REIT IV Inc., a Maryland corporation.
4. | Exception from Termination. The parties hereto agree that notwithstanding the terms of Section 17(a) of the Agreement, the Agreement shall not terminate upon the termination of the Amended and Restated Advisory Agreement (2020), dated as of June 12, 2020, by and among IPT, IPT OP and Industrial Property Advisors LLC, a Delaware limited liability company, and the Agreement (as amended hereby) shall remain in full force and effect. |
5. | Governing Law. This Amendment shall be governed by and construed in accordance with the laws of the State of Colorado applicable to agreements made and to be performed wholly within that State. |
6. | Counterparts. This Amendment may be executed in multiple counterparts, each of which shall be an original but all of which together shall constitute but one and the same agreement. |
7. | Captions/Pronouns. All titles or captions contained in this Amendment are inserted only as a matter of convenience and for reference and in no way define, limit, extend, or describe the scope of this Amendment or the intent of any provision in this Amendment. All pronouns and any variations thereof shall be deemed to refer to the masculine, feminine, and neuter, singular and plural, as the identity of the party or parties may require. |
2
8. | Severability. In case any one or more of the provisions contained in this Amendment or any application thereof shall be invalid, illegal or unenforceable in any respect, such provision shall be reformed and enforced to the maximum extent permitted by law. If such provision cannot be reformed, it shall be stricken and the validity, legality and enforceability of the remaining provisions contained herein and other application thereof shall not in any way be affected or impaired thereby. |
9. | Effective Date. The parties hereto agree that this Amendment shall be effective upon the consummation of the Interest Sale. |
3
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of July 15, 2020.
IPT BTC I GP LLC
By: IPT Real Estate Holdco LLC, a Delaware limited liability company, its sole member
By: Industrial Property Operating Partnership LP, a Delaware limited partnership, its sole member
By: Industrial Property Trust, a Maryland real estate investment trust, its general partner
By: /s/ Thomas G. McGonagle____________
Thomas G. McGonagle
Chief Financial Officer
Industrial Property Advisors Sub I LLC
By: Industrial Property Advisors LLC, a Delaware limited liability company, its sole member
By: Industrial Property Advisors Group LLC, a Delaware limited liability company, its sole member
By: /s/ Evan H. Zucker _______________ __
Evan H. Zucker
Manager
Acknowledged and Agreed
as of this 15th day of July, 2020 by:
BCI IV Advisors LLC
By: _/s/ Evan H. Zucker__________
Manager
Exhibit 10.11
AGREEMENT
THIS AGREEMENT (this “Agreement”) is entered into this 19th day of May, 2017, by and among IPT BTC II GP LLC, a Delaware limited liability company (the “General Partner”) and Industrial Property Advisors Sub III LLC, a Delaware limited liability company (the “Advisor Sub”). The General Partner is an indirect subsidiary of Industrial Property Trust Inc., a Maryland corporation (“IPT”).
RECITALS:
A.The General Partner is the general partner of Build-to-Core Industrial Partnership II LP, a Delaware limited partnership (the “Partnership”), and has entered into that certain Agreement of Limited Partnership of the Partnership, dated as of the date hereof (the “Partnership Agreement”), by and among the General Partner, IPT BTC II LP LLC, a Delaware limited liability company, which is a subsidiary of IPT (the “IPT Limited Partner” and, together with the General Partner, collectively, the “IPT Partners”), Industrial Property Advisors Sub IV LLC, a Delaware limited liability company (the “Advisor Sub IV”), BCG BTC II Investors LLC, a Delaware limited liability company (the “BCG Investors”) and the QuadReal Limited Partner (as defined therein) (each a “Limited Partner” and, together with the IPT Partners, the Advisor Sub IV and the BCG Investors, collectively, the “Partners”).
B.The Partnership Agreement sets forth the terms pursuant to which the Partners intend to jointly invest in a portfolio of industrial properties located in major United States distribution markets. Any term with its initial letter capitalized and not otherwise defined herein shall have the meaning set forth in the Partnership Agreement.
C.Pursuant to Article 6 of the Partnership Agreement, the General Partner, in its capacity as General Partner, is obligated to provide or appoint others, including its affiliates, to provide the Partnership with day-to-day management services, including but not limited to acquisition and asset management services and, to the extent applicable with respect to certain Partnership investments, development and construction management, property management, leasing and disposition services. The Partnership has agreed to pay certain fees (the “Fees”) as compensation for providing the services to the Partnership (the “Services”) that are specifically enumerated in Section 6.3(a) of the Partnership Agreement, other than any investment advisory services with respect to securities (“Investment Advisory Services”), including, where applicable, providing such services to the subsidiaries of the Partnership. The Fees are set forth in Exhibit D to the Partnership Agreement.
D.Pursuant to the Fourth Amended and Restated Advisory Agreement, dated as of August 12, 2016 (the “Advisory Agreement”), by and among IPT, Industrial Property Operating Partnership LP, a Delaware limited partnership (the “Operating Partnership”) and Industrial Property Advisors LLC, a Delaware limited liability company (the “Advisor”), the Advisor provides acquisition and asset management services and, to the extent applicable with respect to certain of IPT’s investments, development and construction management, property management, leasing and disposition services to IPT and IPT’s subsidiaries. The General Partner does not and will not have any employees. Accordingly, the General Partner desires to appoint the Advisor Sub, a subsidiary of the Advisor as the provider of the Services and to assign to the Advisor Sub
all the Fees associated therewith, except for the Guaranty Fee (such assigned Fees which exclude the Guaranty Fee referred to herein as the “Assigned Fees”), and the Advisor Sub desires to accept such appointment and such assignment.
E.The General Partner acknowledges and agrees that one hundred percent (100%) of the Assigned Fees should be paid directly by the Partnership to the Advisor Sub, as the entity that shall provide the Services to the Partnership and its subsidiaries.
NOW THEREFORE, the General Partner and the Advisor Sub hereby agree as follows:
|
Denver, Colorado 80202 |
|
Attention: Evan H. Zucker |
|
|
with a courtesy copy to: |
518 Seventeenth Street, 17th Floor |
|
Denver, Colorado 80202 |
|
Attention: Gary M. Reiff, Esq. |
|
|
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first set forth above.
IPT BTC II GP LLC
By: IPT Real Estate Holdco LLC, a Delaware limited liability company, its sole member
By: Industrial Property Operating Partnership LP, a Delaware limited partnership, its sole member
By: Industrial Property Trust Inc., a Maryland corporation, its general partner
By: /s/ Thomas G. McGonagle
Thomas G. McGonagle
Chief Financial Officer
Industrial Property Advisors Sub III LLC
By: Industrial Property Advisors LLC, a Delaware limited liability company, its sole member
By: Industrial Property Advisors Group LLC, a Delaware limited liability company, its sole member
By: /s/ Evan H. Zucker
Evan H. Zucker
Manager
Industrial Property Advisors LLC
By: Industrial Property Advisors Group LLC, a Delaware limited liability company, its sole member
By: /s/ Evan H. Zucker
Evan H. Zucker
Manager
Exhibit 10.12
FIRST AMENDMENT TO AGREEMENT
THIS FIRST AMENDMENT (this “Amendment”) to the Agreement, dated as of May 19, 2017 (the “Agreement”), by and between IPT BTC II GP LLC, a Delaware limited liability company (the “General Partner”), and Industrial Property Advisors Sub III LLC, a Delaware limited liability company (the “Advisor Sub”), is entered into as of July 15, 2020 by and among the General Partner and Advisor Sub.
RECITALS:
NOW THEREFORE, for and in consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are acknowledged hereby, the parties hereto agree as follows:
1. | Capitalized Terms. The capitalized terms used in this Amendment and not defined herein shall have the meanings ascribed to them in the Agreement. |
2. | Conforming Amendments. |
b. | Paragraph D of the Recitals in the Agreement is hereby deleted in its entirety and replaced with the following: |
Pursuant to the Amended and Restated Advisory Agreement (2020), dated as of June 12, 2020 (the “Advisory Agreement”), by and among BCI IV, BCI IV Operating Partnership LP, a Delaware limited partnership (the “Operating
Partnership”) and BCI IV Advisors LLC, a Delaware limited liability company (the “Advisor”), the Advisor provides acquisition and asset management services and, to the extent applicable with respect to certain of BCI IV’s investments, development and construction management, property management, leasing and disposition services to BCI IV and BCI IV’s subsidiaries. The General Partner does not and will not have any employees. Accordingly, the General Partner desires to appoint the Advisor Sub, an affiliate of the Advisor, as the provider of the Services and to assign to the Advisor Sub all the Fees associated therewith, except for the Guaranty Fee (such assigned Fees which exclude the Guaranty Fee referred to herein as the “Assigned Fees”), and the Advisor Sub desires to accept such appointment and such assignment.
c. | The reference to “Gary M. Reiff, Esq.” in Section 3 of the Agreement is hereby deleted in its entirety and replaced with “Josh Widoff, Esq.” |
d. | The reference to “Articles of Amendment and Restatement of IPT” in the first sentence of Section 18 of the Agreement is hereby deleted and replaced with “Third Articles of Amendment and Restatement of BCI IV.” |
3. | New Defined Term. The Agreement is hereby amended by adding to the Agreement the below term following the first instance of use of such term in the Agreement (as amended hereby): |
“BCI IV” means Black Creek Industrial REIT IV Inc., a Maryland corporation.
4. | Exception from Termination. The parties hereto agree that notwithstanding the terms of Section 17(a) of the Agreement, the Agreement shall not terminate upon the termination of the Amended and Restated Advisory Agreement (2020), dated as of June 12, 2020, by and among IPT, IPT OP and Industrial Property Advisors LLC, a Delaware limited liability company, and the Agreement (as amended hereby) shall remain in full force and effect. |
5. | Governing Law. This Amendment shall be governed by and construed in accordance with the laws of the State of Colorado applicable to agreements made and to be performed wholly within that State. |
6. | Counterparts. This Amendment may be executed in multiple counterparts, each of which shall be an original but all of which together shall constitute but one and the same agreement. |
7. | Captions/Pronouns. All titles or captions contained in this Amendment are inserted only as a matter of convenience and for reference and in no way define, limit, extend, or describe the scope of this Amendment or the intent of any provision in this Amendment. All pronouns and any variations thereof shall be deemed to refer to the masculine, feminine, and neuter, singular and plural, as the identity of the party or parties may require. |
2
8. | Severability. In case any one or more of the provisions contained in this Amendment or any application thereof shall be invalid, illegal or unenforceable in any respect, such provision shall be reformed and enforced to the maximum extent permitted by law. If such provision cannot be reformed, it shall be stricken and the validity, legality and enforceability of the remaining provisions contained herein and other application thereof shall not in any way be affected or impaired thereby. |
9. | Effective Date. The parties hereto agree that this Amendment shall be effective upon the consummation of the Interest Sale. |
3
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of July 15, 2020.
IPT BTC II GP LLC
By: IPT Real Estate Holdco LLC, a Delaware limited liability company, its sole member
By: Industrial Property Operating Partnership LP, a Delaware limited partnership, its sole member
By: Industrial Property Trust, a Maryland real estate investment trust, its general partner
By: /s/ Thomas G. McGonagle
Thomas G. McGonagle
Chief Financial Officer
Industrial Property Advisors Sub III LLC
By: Industrial Property Advisors LLC, a Delaware limited liability company, its sole member
By: Industrial Property Advisors Group LLC, a Delaware limited liability company, its sole member
By: /s/ Evan H. Zucker
Evan H. Zucker
Manager
Acknowledged and Agreed
as of this 15th day of July, 2020 by:
BCI IV Advisors LLC
By: /s/ Evan H. Zucker
Evan H. Zucker
Manager
Exhibit 31.1
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
PURSUANT TO SECTION 302 OF
THE SARBANES-OXLEY ACT OF 2002
I, Jeffrey W. Taylor certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of Black Creek Industrial REIT IV Inc. (the “registrant”);
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
November 10, 2020 |
/s/ JEFFREY W. TAYLOR |
|
Jeffrey W. Taylor Managing Director, Co-President (Principal Executive Officer) |
Exhibit 31.2
CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER
PURSUANT TO SECTION 302 OF
THE SARBANES-OXLEY ACT OF 2002
I, Scott A. Seager, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of Black Creek Industrial REIT IV Inc. (the “registrant”);
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
November 10, 2020 |
/s/ SCOTT A. SEAGER |
Scott A. Seager Senior Vice President, Chief Financial Officer and Treasurer (Principal Financial Officer and Principal Accounting Officer) |
Exhibit 32.1
CERTIFICATIONS PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
Certification of Principal Executive Officer
In connection with the Quarterly Report on Form 10-Q of Black Creek Industrial REIT IV Inc. (the “Company”) for the period ended September 30, 2020, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Jeffrey W. Taylor, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
|
November 10, 2020 |
/s/ JEFFREY W. TAYLOR |
Jeffrey W. Taylor Managing Director, Co-President (Principal Executive Officer) |
Certification of Principal Financial Officer
In connection with the Quarterly Report on Form 10-Q of Black Creek Industrial REIT IV Inc. (the “Company”) for the period ended September 30, 2020, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Scott A. Seager, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
|
November 10, 2020 |
/s/ SCOTT A. SEAGER |
Scott A. Seager Senior Vice President, Chief Financial Officer and Treasurer (Principal Financial Officer and Principal Accounting Officer) |
Exhibit 99.1
CONSENT OF INDEPENDENT VALUATION FIRM
We hereby consent to the reference to our name and the description of our role in the valuation process described under the heading “Management's Discussion and Analysis of Financial Condition and Results of Operations—Net Asset Value" in Part I, Item 2 of the Quarterly Report on Form 10-Q for the period ended September 30, 2020 of Black Creek Industrial REIT IV Inc. (the “Company”), filed by the Company with the Securities and Exchange Commission on the date hereof, being included or incorporated by reference in the Company’s Registration Statement on Form S-8 (File No. 333-228818). We also hereby consent to the same information and the reference to our name under the heading “Experts” being included or incorporated by reference in the Company’s Registration Statement on Form S-11 (File No. 333-229136) and the related prospectus that is a part thereof. In giving such consent, we do not thereby admit that we are in the category of persons whose consent is required under Section 7 of the Securities Act of 1933.
|
|
|
/s/ Altus Group U.S. Inc. |
November 10, 2020 |
Altus Group U.S. Inc. |