Blackstone Group sells portfolio for $2.9bn

BY Richard Summerfield

Blackstone Group has agreed to sell its portfolio of warehouse and logistics assets in Australia to ESR Cayman Ltd in a deal worth $2.9bn.

ESR, a Hong Kong-listed property manager, has partnered with Singaporean sovereign wealth fund GIC Pte Ltd to acquire the portfolio. GIC will contribute 80 percent of the required equity for the deal, with ESR providing the rest. The portfolio consists of 45 assets held by Blackstone’s Milestone Logistics across major cities including Adelaide, Brisbane, Melbourne, Perth and Sydney, covering a total land area of 3.6 million square metres.

The deal, which is expected to provide an initial yield of 4.5 percent with a 6.9-year weighted average lease expiry, is the largest logistics and general property portfolio transaction in Australia to date. Upon completion, ESR will be the third-biggest logistics landlord in the country with assets under management increasing to A$7.9bn.

The potential sale of the portfolio has been under discussion for some time. In January, Blackstone received more than 10 first-round bids for Milestone Logistics. The firm also considered an initial public offering (IPO) for the portfolio.

“The opportunity to secure such a large portfolio with extremely well-located assets across Adelaide, Brisbane, Melbourne, Perth and Sydney, strategically positions EMP to benefit from the continued growth in demand for warehouse space, particularly as the robust demand for logistics real estate is expected to remain strong due to sustained growth in e-commerce,” said Phil Pearce, chief executive of ESR Australia.

“We are extremely pleased to deepen our partnership with GIC with this momentous transaction,” said Jeffrey Shen and Stuart Gibson, co-founders and group co-chief executives of ESG. “The acquisition of the Milestone portfolio is a significant leap forward for ESR. This tremendous expansion not only adds immediate scale to our presence in Australia and the region, but also extends our footprint and reaffirms our commitment to one of our highest conviction markets in Asia Pacific.”

GIC and ESR are no strangers to one another. In December 2020, the firms announced a strategic partnership to establish a $750m joint venture to develop and acquire industrial and logistics assets in India.

News: ESR, GIC to buy Australian logistics property portfolio from Blackstone for $2.9 bln

Public Storage strikes $1.8bn ezStorage deal

BY Richard Summerfield

Public Storage Inc., a self-storage real estate investment trust (REIT) and third-party management firm, has agreed to acquire its smaller rival ezStorage for $1.8bn.

The deal, which is expected to close in May 2021, will see Public Storage acquire California-based ezStorage and its 48 properties, which comprise 4.2 million net rentable square feet across Washington, DC, Virginia and Maryland. The company will fund the transaction with unsecured debt and expects it to be immediately accretive to funds from operations (FFO).

“We are pleased to welcome the ezStorage customers to Public Storage’s industry-leading brand and platform,” said Joe Russell, chief executive of Public Storage. “The acquisition is a direct reflection of Public Storage’s unique positioning for growth through acquisitions, development, redevelopment, and third-party management.”

“We thank the Manganaro family and the ezStorage team for their integrity through our long-standing relationship,” said Mike McGowan, senior vice president of acquisitions at Public Storage. “Their properties reflect unparalleled local-market knowledge and a focus on location and property quality. Looking ahead, we see a wide range of opportunities to acquire and develop properties in desirable markets as part of Public Storage’s broader growth initiatives.”

Public Storage has interests in 2548 self-storage facilities in 38 states across the US, with approximately 175 million net of rentable square feet. The company also holds a 35 percent interest in Shurgard Self Storage SA, which has 241 facilities in seven European countries, with approximately 13 million net rentable square feet.

Public Storage has been particularly active in the M&A market in recent years. Since 2019, the company expanded its net rentable square feet by 13 percent, or about 21 million net rentable square feet, through $4.1bn in acquisitions, development and expansions, not including the deal for ezStorage.              

Under the terms of the deal, Public Storage will take over responsibility of one property still under construction and intends to expand eight existing ezStorage locations. Those projects will increase the portfolio’s square footage by 10 percent throughout 2023, the company announced.

News: Public Storage acquires rival ezStorage for $1.8 billion

Genworth pulls plug on $2.7bn acquisition by China Oceanwide

BY Fraser Tennant

Citing unreasonable time frames and a need for greater clarity as to its future, US insurance company Genworth Financial has terminated its long-delayed $2.7bn acquisition by privately owned investment company China Oceanwide. 

First announced in 2016 and originally expected to close in the following year, regulatory hurdles and financing issues repeatedly delayed the acquisition, which was further complicated over the past year by the global coronavirus (COVID-19) pandemic.

“Our board of directors has concluded that China Oceanwide will be unable to close the proposed transaction within a reasonable time frame and that greater clarity is needed now in order for Genworth to execute its plans to maximise shareholder value,” said James Riepe, non-executive chairman of the Genworth board of directors. “Thus, the board decided to terminate the merger agreement.”

Genworth has stated that the termination will allow it to pursue its revised strategic plan without restrictions and without uncertainty regarding its ultimate ownership, which it believes may impact its ability to successfully execute the plan.

Those plans include a potential partial initial public offering (IPO) of Genworth's US mortgage insurance business, subject to market conditions as well as the satisfaction of various conditions and approvals. Genworth has already sold its interest in its Australian mortgage insurance business.

“We are grateful for China Oceanwide’s commitment to our planned transaction over the years,” said Tom McInerney, president and chief executive of Genworth. “During that time, we together navigated significant market uncertainty and regulatory hurdles, a testament to both parties' good faith efforts to complete the transaction.”

Despite the termination of the acquisition, Beijing-based China Oceanwide and Genworth have stated that they will continue to explore potential opportunities to bring long-term care insurance and other similar products to the Chinese insurance market in the future.

Mr Riepe concluded: “Although disappointed after more than four years of efforts, I want to especially thank our shareholders, regulators, policyholders, customers and employees, for their patience and support as we all persevered through an especially long and arduous cross-border approval process.”

News: Insurer Genworth terminates $2.7 billion buyout deal with China Oceanwide

Hitachi goes GlobalLogic

BY Richard Summerfield

Hitachi Ltd has agreed to acquire US software company GlobalLogic Inc in a deal worth $9.6bn, including debt. The acquisition, which is being funded with cash and bank loans, is expected to close by the end of July 2021.

Hitachi, the Japanese electronics and construction giant, will acquire GlobalLogic, which was founded in 2000, from current owners Canada Pension Plan Investment Board (CPPIB) and Swiss investment firm Partners Group. CPPIB and Partners Group each hold 45 percent of the company and GlobalLogic’s management owns the remaining stake.

“The acquisition of GlobalLogic creates an exciting new opportunity for Hitachi to expand our offerings of Lumada solutions and services, provide value to customers in their digital transformation journey, and grow our Lumada business globally,” said Toshiaki Higashihara, president and chief executive of Hitachi. “The synergy of GlobalLogic’s leading experience design and innovation with Hitachi’s expertise in IT, operational technology, and products, will help us realize our goal to be the leading digital transformation innovator in social infrastructure worldwide.”

He added: “Together, we will create new social, environmental and economic value for our globally expanding client companies and elevate QoL (quality of life) for people through contributions to realize sustainable society.”

“Companies in every industry are transforming with digital technology – to better engage customers, create new revenue streams and drive a higher quality of life,” said Shashank Samant, president and chief executive of GlobalLogic. “We have a tremendous opportunity ahead and we are excited to embark on this journey with Hitachi, combining our collective skills, technologies, and market presence to deliver greater value to our clients as they transform their businesses.”

The acquisition of GlobalLogic is part of Hitachi’s 2021 plan to invest one trillion yen to strengthen the digital capabilities of its businesses.

Partners Group acquired a joint lead ownership equity stake in GlobalLogic alongside equity partner Canada Pension Plan Investment Board in 2018 at an enterprise value of $2bn.

“GlobalLogic is serving clients on the front line of the digital transition, helping them reimagine their offering, adapt their business models and change how they engage with consumers,” said Dr Marcel Erni, co-founder and member of the board of directors of Partners Group. “Digitization is one of the three investment giga themes that Partners Group is focused on that is driving change across industries worldwide. GlobalLogic is an exciting success story demonstrating how Partners Group delivers sustainable returns to our clients through transformational investing.”

News: Hitachi to buy U.S. software developer GlobalLogic for $9.6 billion

WeWork goes public via $9bn SPAC merger with BowX

BY Fraser Tennant

In a transaction with an enterprise value of approximately $9bn, flexible space provider WeWork is to become a publicly listed company via a merger with special purpose acquisition company (SPAC) BowX Acquisition Corp.

Under the terms of the definitive merger agreement, WeWork will be provided with approximately $1.3bn of cash which will enable it to fund its growth plans into the future. The transaction will be funded with BowX’s $483m of cash in trust in addition to a fully committed $800m private placement investment at $10 per share.

Since 2019, WeWork has made significant progress on a strategic plan that included robust expense management efforts, exits of non-core businesses and material portfolio optimisation, which contributed to a dramatically improved cost structure.

“WeWork has spent the past year transforming the business and refocusing its core, while simultaneously managing and innovating through a historic downturn,” said Sandeep Mathrani, chief executive of WeWork. “As a result, WeWork has emerged as the global leader in flexible space with a value proposition that is stronger than ever.”

Upon closing, it is expected that WeWork will have approximately $1.9bn of cash on the balance sheet and total liquidity of $2.4bn, even after exiting non-core businesses and despite significant headwinds from the coronavirus (COVID-19) pandemic.

“I am thrilled to partner with  WeWork team as they continue to transform this business and the real estate industry at large,” said Vivek Ranadivé, chairman and co-chief executive of BowX. “With a fantastic core business, I see WeWork as a company at an inflection point, with an incredible roster of key members coupled with the vision and leadership to digitalise an enormous industry.”

Going forward, WeWork intends to expand beyond its core business through its On Demand, All Access and Platform offerings, enabling users to choose from their WeWork mobile app when, where, and how they work. Furthermore, demand from landlords and members remains strong, with a $4bn total sales pipeline and an estimated $1.5bn in committed 2021 revenue.

Marcelo Claure, executive chairman of WeWork, concluded: “WeWork is incredibly well positioned to springboard into a future propelled by digital technology and a new appreciation of the value of flexible workspace. We look forward to having BowX as our partner as we look to the next chapter.”

News: WeWork takes SPAC route to go public in $9 billion deal