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Oxford Properties buys KKR warehouses in $2.2-billion deal

Acquiring 149 distribution properties in 12 U.S. markets

Oxford Properties Group agreed to buy a portfolio of industrial properties from KKR & Co. for about US$2.2 billion as online shopping continues to drive investors toward warehouses.

Oxford, the real estate arm of the Ontario Municipal Employees Retirement System, is acquiring 149 distribution properties in 12 U.S. markets, including Dallas, Phoenix, Chicago and Tampa, according to a statement Tuesday.

Warehouses were a hot corner of commercial real estate even before the pandemic, with investors betting on the rise of e-commerce and demand for quick shipping. COVID-19 pushed consumers to shop online even more, fuelling more investment in logistics properties.

“This transaction is an important next step for Oxford to build a large scale industrial business in the U.S.,” Ankit Bhatt, Oxford’s vice president of investments, said in the release. “Growing our U.S. industrial business is one of Oxford’s highest conviction global investment strategies as we continue to build, buy and invest in the physical infrastructure that serves the digital economy.”

The purchase by Oxford comes after a hard year for OMERS, with the pension fund posting its worst annual loss since the 2008 global financial crisis.

OMERS blamed the 2.7 per cent decline on its exposure to “old economy” investments, including retail properties, and said its plan was to invest in to what it termed the “new economy.”

Though mid-year results released last week showed a turnaround, with an 8.8 per cent gain across the portfolio, it hasn’t been enough yet to ease some members’ concerns about the fund’s longterm performance.