Blackstone buys warehouse assets for $18.7bn

August 2019 | DEALFRONT | PRIVATE EQUITY & VENTURE CAPITAL

Financier Worldwide Magazine

August 2019 Issue

Private equity giant Blackstone Group LP has announced that it is acquiring the US industrial warehouse properties of Singapore-based logistics provider GLP for $18.7bn. The deal is the largest ever private real estate transaction globally and Blackstone’s third-biggest ever acquisition.

In total, Blackstone will acquire 179 million square feet of urban, infill logistics assets, nearly doubling the firm’s existing US industrial footprint. It will split the GLP assets between two funds: Blackstone Real Estate’s BREP will acquire 115 million square feet for $13.4bn and its income-oriented non-listed REIT, Blackstone Real Estate Income Trust (BREIT), will acquire 64 million square feet for $5.3bn, the companies said in a statement. Blackstone is believed to have beaten Prologis Inc and Brookfield Asset Management Inc to acquire GLP’s properties.

The deal is a significant bet on logistics and e-commerce and will make Blackstone the largest US owner and operator of warehouses, shipping centres and related logistics assets focused on e-commerce sales and deliveries. Including the acquisition of GLP’s assets, Blackstone has acquired over 930 million square feet of logistics assets globally since 2010. Last year, Blackstone purchased Canyon Industrial Portfolio’s 22-million square foot portfolio of industrial assets for $1.8bn and reached a $1.9bn deal to buy Canada’s Pure Industrial Real Estate Trust. The firm has also agreed to spend $950m for more than 100 warehouse assets from Harvard University’s endowment.

“Logistics is our highest conviction global investment theme today, and we look forward to building on our existing portfolio to meet the growing e-commerce demand,” said Ken Caplan, global co-head of Blackstone Real Estate. “Our global scale and ability to leverage differentiated investment strategies allowed us to provide a one-stop solution for GLP’s high quality portfolio.”

GLP’s portfolio includes about 1300 properties, and counts Amazon.com as its biggest tenant. “GLP was able to leverage our deep operating expertise and global insights in the logistics sector within four years to build and grow an exceptional portfolio,” said Alan Yang, chief investment officer of GLP. “We are proud of the business our team built and are confident it will continue to flourish under Blackstone’s leadership. We are looking forward to expanding our footprint in the United States to continue to seize key opportunities in the US market.”

“These properties are a complementary addition to our stabilised commercial real estate portfolio, which is oriented toward our highest conviction themes, such as logistics,” said Frank Cohen, chairman and CEO of BREIT.

Global investment manger GLP has $64bn assets under management in real estate and private equity funds. The firm’s real estate fund platform is one of the largest in the world, spanning 785 million square feet. GLP entered the US real estate market in 2015 and through a series of major acquisitions became the second-largest owner of logistics real estate assets in the country by aggregating high-quality, modern logistics assets across 36 major markets. It will remain invested in the US and is committed long term to the country, however the bulk of its operations will shift to Asia. GLP has 212 million square feet of space in China, with an additional 56 million square feet in Japan.

GLP had reportedly been considering an initial public offering (IPO) for its American warehouses, which would have valued the company’s US-based operations at around $20bn. The company first entered the US logistics market in 2015 when it completed its purchase of a majority stake in IndCor Properties from Blackstone for $8.1bn. Within a year, GLP had expanded its portfolio to become the second-largest owner of logistics property in the US. GLP currently owns property worth $37bn in China, Japan and India.

Richard Summerfield