Fortress Investment Group is sponsoring a second issuance of asset-backed bonds, totaling $1.45 billion, to finance 19 newly constructed or planned Amazon logistics and distribution centers it owns under a triple-net lease arrangement with the online commerce giant.
The CF Hippolyta Issuer Series 2021-1 notes will be backed by Fortress’ lease interests in the Amazon warehouse and last-mile delivery fulfillment centers, according to a report from S&P Global Rqatings. The 19 properties are located in 15 states.
The transaction follows up the
The transaction, expected to close March 17, includes a $1.21 billion Class A-1 tranche with a preliminary AA- rating from S&P, and a $241.71 million Class B-1 tranche with an A- rating.
Goldman Sachs and BMO Capital Markets are joint bookrunners on the transaction.
The 19 properties include seven centers that are still under construction.
The fulfillment center leases have original lease terms of 20 years, with all but one possessing five contractual extension options of five years, according to S&P. The leases are unconditionally guaranteed by Amazon, which is responsible for all property-level expenses including taxes, utilities, insurance and repairs/maintenance.
Amazon is also fronting $204 million into a forward-funded accounts to complete the construction on unfinished centers this year, with leases commencing between July and November.
Since 2010, Amazon has grown its warehouse footprint at an annual average rate of 222 million square feet, a record pace for the logistics industry, according to a report from S&P.
Amazon and Fortress’ rapid building pace is driven by growing demand for quick-turn home delivery, a trend that accelerated in the past year in response to pandemic conditions that limited brick-and-mortar store access for consumers, according to S&P.
Another factor in the large-scale construction of new Amazon fulfilment centers is the current record-low vacancy rate (4.6%) for existing industrial properties.
