Brookfield and CPPIB team up to buy US$5.2 billion industrial REIT
Tomas Kauer 
Two of Canada’s largest institutional investors are paying US$5.2 billion to acquire LXP Industrial Trust, a New York-based company with expertise in buying and developing premium industrial real estate in key logistics markets in the United States.
Brookfield Asset Management and the Canada Pension Plan Investment Board are paying a 19.8 per cent premium to the 90-day volume-weighted average price for the publicly traded r eal estate investment trust, which focuses on Class A warehouse and distribution investments in 12 markets across the Sunbelt and U.S. Midwest.
LXP went public in 1993 as Lexington Realty Trust and trades on the New York Stock Exchange. It began as a diversified net-lease real estate investment trust and transitioned into what is now primarily a single-tenant industrial REIT focused on high-quality warehouse and distribution assets in a dozen U.S. logistics markets.
The company now owns one of the largest portfolios of modern warehouse and logistics facilities in the United States, with about 53 million square feet across 108 properties.
“The portfolio is characterized by modern assets, strong occupancy and long-duration leases that generate durable cash flows and is well positioned to benefit from the demand for high-quality, well-located logistics properties,” the trio said in a statement announcing the all-cash transaction.
The current business produces a combination of income and growth, which proved attractive to the Canadian institutional investors.
“The acquisition aligns with our strategy of investing in high-quality real estate with durable cash flows and opportunities to create value through active asset management,” said Lowell Baron, chief executive officer of Brookfield Real Estate.
Sophie van Oosterom, head of real estate at CPP Investments, said the investment portfolio alongside operating expertise in the partnership would generate sustainable investment returns for the CPP Fund.
“The industrial sector, particularly in the U.S., continues to offer attractive long-term investment opportunities,” she said, adding that demand drivers include domestic manufacturing, evolving global supply chains and population growth across key Sunbelt markets.
Under the terms of the definitive agreement, LXP shareholders will receive $61.20 per share in cash. The transaction is not subject to a financing condition.
Thomas W. Eglin, Jr., chairman and chief executive of LXP, said the company’s board of trustees unanimously determined that the Brookfield and CPP transaction fully maximizes value for shareholders.
“This transaction is the culmination of the LXP team’s successful execution of our strategic plan to transform … into a pure play industrial REIT, curate a best-in-class portfolio, and implement our development program,” he said.
The deal is expected to close in the fourth quarter of 2026, subject to approval by LXP’s shareholders and satisfaction of other customary closing conditions, after which LXP would not longer trade on the New York Stock Exchange and would become a private company.
There is a 40-day “go-shop” period that expires at 11:59 p.m. on Aug. 28, during which time LXP and its assistance of its advisers may actively solicit and consider alternative acquisition proposals and engage in discussions with third parties.
Subject to the terms and conditions of the definitive agreement, LXP could terminate the Brookfield and CPPIB transaction to enter into a transaction that constitutes a superior proposal, subject to the payment of a termination fee that was not disclosed.
However, LXP said there can be no assurance that the solicitation process will result in a superior proposal or that any other transaction will be approved or completed. The company does not intend to disclose developments with respect to this solicitation process unless its board determines such disclosure is appropriate or otherwise required.
Under the terms of the definitive agreement with Brookfield and CPPIB, LXP has agreed to suspend payment of common share dividends until the earlier of the closing of the transaction or the termination of the definitive agreement.
• Email: bshecter@postmedia.com
