Global shipping company United Parcel Service agreed to sell at least four industrial and office properties in the Atlanta, Chicago and Southern California markets to Fortress Investment Group for about $368 million.
UPS plans to continue to occupy at least one property in the portfolio, an office building in Alpharetta, Georgia, according to deed records. The remaining buildings that UPS sold to Fortress are in California's Inglewood and Jurupa Valley; and Bensenville, Illinois. Fortress did not respond to CoStar News' requests to comment. A UPS spokesman did not immediately respond to questions when reached by CoStar News.
UPS has been cutting costs to deal with reduced volume as a result of shifting U.S. trade policies and the anticipated decline in volume from its largest customer, Amazon, the company said in a Securities and Exchange Commission filing in August.
The Atlanta-based company has said it plans to reduce expenses this year by about $3.5 billion by closing buildings, cutting jobs and restructuring its network and product offerings. During the first half of the year, UPS closed 74 leased and owned locations across the country, of which 68 locations were closed permanently, according to the filing.
"Changes in trade policies are impacting global trade and demand," UPS CEO Carol Tomé said during a second-quarter conference call. "It will likely all settle down at some point but, for now, it is a very volatile environment."
The sale-leasebacks come as UPS makes significant changes to its real estate footprint. In July, for example, UPS vacated office space at 35 Glenlake Parkway in Atlanta and moved its 500 workers to its headquarters, located next door at 55 Glenlake Parkway, according to media reports.
The changes are "intended to enhance our efficiency through automation and operational sort consolidation in our U.S. domestic network," UPS said in the regulatory filing last month.
As of June 30, UPS had "incurred $37 million in accelerated depreciation and asset retirement obligations related to closed facilities and abandoned equipment," according to the filing.
UPS has not identified or provided details on all the buildings that it has closed or vacated as part of the cost-cutting initiatives.
The UPS properties involved in the sale-leaseback with Fortress are:
- 11991 Landon Drive, a 765,456-square-foot distribution center in Jurupa Valley, California.
- 12380 Morris Road, a 310,000-square-foot office building in Alpharetta, Georgia.
- 490 Supreme Drive, a 230,178-square-foot distribution center and warehouse in Bensenville, Illinois.
- 3624 W. Century Blvd., an 84,994-square-foot warehouse in Inglewood, California.
For the record
Mintz, Levin, Cohn, Ferris, Glovsky & Popeo was legal counsel on some of the sales in the portfolio transaction with Fortress.