Blackstone Group announced this week that it’s purchasing a network of United States industrial warehouses from the Singapore-based global investment manager GLP for $18.7 billion, reports The Wall Street Journal. The deal is the biggest private real estate transaction ever. Blackstone outbid real estate company Prologis for the 180 million square foot portfolio. The deal price includes $8 billion of debt according to people familiar with the transaction, which Blackstone plans to refinance.
The portfolio comprises approximately 1,300 properties across the United States. GLP plans to keep a small footprint in the U.S. along with its significant holdings in Asia, according to The Wall Street Journal. The company will also look for inroads into Europe and Latin America. GLP Chief Investment Officer Alan Yang has said he’s looking forward to the company expanding in the United States.
“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,” Ken Caplan, global Co-Head of Blackstone Real Estate said in a statement.
“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.” Yang said.
Amazon.com, GLP’s largest tenant, and other e-commerce companies’ rise have increased the demand for industrial warehouses. Publicly traded warehouse owners have seen their valuations increase by 30% this year in some cases. Properties near big cities are often deemed the most valuable, as they can help meet the growing demand for next-day delivery.
Nadeem Meghji, who runs Blackstone’s U.S. real-estate investing activities, said GLP matched the firm’s focus on, “large scale, high conviction and thematic investing,” according to The Wall Street Journal. The sale will make Blackstone one of the largest owners of U.S. logistics properties, as its holdings will expand to approximately 750 million square feet. Blackstone currently has $140 billion of assets, including Willis Tower in Chicago and the Cosmopolitan of Las Vegas resort and casino.
Blackstone previously owned about half of the properties it’s purchasing as part of this deal, according to sources familiar with the transaction. For example, the firm sold IndCor Properties, an industry warehouses portfolio to GLP in 2015. Afterwards, GLP flipped about $1 billion worth of properties and then made two major acquisitions according to The Wall Street Journal. Today, the company is making the biggest private real estate deal in history.
Blackstone plans to divide the assets, putting about two thirds into its global opportunistic real estate strategy and the rest in its private real estate investment trust, Blackstone Real Estate Income Trust (BREIT). The assets headed to the REIT will be accessible to retail investors, have longer-term leases and provide a consistent revenue stream.