French logistics REIT Argan has closed the acquisition of the massive Cargo portfolio in France from a consortium of institutional investors led by Carrefour for a net price of €900 mln.
Encompassing 1.1 million m2, the portfolio includes a total of 22 logistics platforms leased to hypermarket chain Carrefour, on terms averaging five years, and residual lease lengths averaging around six years.
The majority of the warehouses were recently developed by Carrefour as part of the overhaul of its logistics network in France to serve all its store formats.
The acquisition will be partly financed through the issue of new shares, at a price of €50 a share, for a total of €279 mln. Following the operation, Credit Agricole Assurances which took part in the consortium will own 16.77% of Argan, while Carrefour will own 5.21% and Primonial Capimmo 3.19%. The founding Le Lan family will hold 40.03% and the float will represent 34.80%.
The balance of €619 mln will be paid in cash and financed with a bridge loan of €645 mln, of which €26 mln will be used to pay part of the fees. Argan plans to shortly refinance this bridge loan with mortgage loans already in place.
Argan, which owned 1.7 million m2 of logistics space valued at €1.7 bn before this deal, said the acquisition will result in a 47% increase in its annual net rental income to €140 mln, while the cost of debt will fall from 1.90% to 1.65% thanks to the favourable conditions of the loans related to the refinancing of the acquisition.
Jean-Claude Le Lan, chairman of the supervisory board and founder, said: 'The acquisition of this perfectly homogenous warehouse portfolio with our own assets boosts our growth and improves our results. This operation, probably the most important in this asset class ever carried out in France, is a step in the consolidation of the sector to which we will participate.'