High Conviction: Blackstone Drops $19B To Buy Back Big Chunk Of Logistics Portfolio It Sold In 2014
They say never go back. But when it comes to U.S. industrial property, Blackstone has just thrown that maxim out of the window of a speeding delivery van.
Blackstone yesterday announced that it had bought a 179M SF portfolio of U.S. industrial assets from Singapore-based GLP for $18.7B. GLP entered the U.S. logistics market when it bought Blackstone’s 117M SF industrial portfolio, IndCor, for $8.1B in 2014.
Since then GLP sold about $1B of that portfolio, which was mainly big-box logistics, and used it to expand and become the second-largest owner of industrial assets in the U.S. after Prologis. As well as IndCor, it bought or built around 62M SF of urban infill logistics, the kind of edge-of-city locations that are becoming vital in helping retailers fulfill e-commerce orders.
And now Blackstone has bought the whole lot as part of a continued push into the sector it sees as performing better than any other globally.
The biggest tenants in the 1,300-asset portfolio are Amazon and Whirlpool, according to Bloomberg. FedEx, Home Depot, L’Oreal, UPS, Starbucks and Tesla are among the other tenants.
“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,” Blackstone Real Estate Global co-Head Ken Caplan said in a press release. That assertion is backed up by other recent purchases in the sector, including the $7.6B takeover of Gramercy Property Trust last year.
The GLP deal almost doubles the size of Blackstone’s U.S. industrial portfolio. About 115M SF of the assets, valued at $13.4B, are being bought by Blackstone’s opportunistic funds, and are located in markets like the Bay Area and Los Angeles, Seattle, Miami, New Jersey and Portland, Oregon.
The remaining 64M SF, valued at $5.3B, are being bought by Blackstone’s unlisted REIT, which tends to buy properties with longer-term income. Those properties are in the Dallas-Fort Worth area, Chicago, central Pennsylvania, Atlanta and south and central Florida.
GLP had been considering an initial public offering of the portfolio, which would have been the biggest real estate IPO in history. But the process alerted potential buyers, including Prologis and Brookfield, before Blackstone sealed the deal. GLP was listed in Singapore before being taken private in 2017, and Blackstone was among the bidders for the whole company.
Blackstone stressed in its release that the portfolio had a high component of urban infill assets, as this is seen as the area of strongest growth in the logistics market. In Europe it has been investing heavily into this sector also and has built up a portfolio of more than €6B of such assets, more than a third of which are in the UK.
Its strategy with industrial has been to build businesses and then sell them to investors with a lower cost of capital that want a ready-made platform in the sector. That is what it did with IndCor, and in Europe it sold a similar business called Logicor to China Investment Corp. for €12B.