U.S. asset manager The Blackstone Group has agreed a deal for what will be the largest private property investment transaction in history. Blackstone is buying a portfolio of around 1300 commercial warehouse properties located across the USA from Singapore-based GLP, the investment manager that specialises in logistics. Blackstone will pay a whopping $18.7 billion for the warehouses, having finally come out on top of what has been reported as ‘prolonged bidding war’ with ProLogis.
Blackstone is one of the world’s biggest property investors, with a diversified international portfolio that spans commercial property classes as well as residential assets. The GLP portfolio will add 179 million sq ft of urban logistics warehouses. That adds to the 930 million sq ft of logistics properties the investor has built up in an international portfolio since 2010. It almost doubles the portfolio’s current exposure to industrial properties in the USA.
The total $18.7 billion price includes $8 billion in net debt attached to the warehouse properties, which Blackstone will split between two different units.
While generally investing heavily into building ups its warehouse and logistics property assets, Blackstone’s transactions haven’t been all in one direction. It divested itself of European warehouse company Logicor to the China Investment Corporation for $12.25 billion in 2017, demonstrating a preference for the U.S. market. CIC is China, and Asia’s, largest sovereign wealth fund.
The huge logistics property investment deal can be viewed as a sign Blackstone is betting on the ‘supertrend’ of increasing deliveries. That is the result of the growing share of retail that is conducted online and reflected by the fact ecommerce giant Amazon is the biggest client of the warehouse portfolio purchased. In fact, that strategy was directly confirmed by Ben Caplan, Blackstone’s co-head of real estate, who commented on the acquisition:
“Logistics is our highest conviction global investment theme today, and we look forward to building on our existing portfolio to meet the growing ecommerce demand.”
Ecommerce is already a huge market segment but still growing quickly. In 2018, the value of ecommerce in the USA was around $5.5 billion but is expected to reach $7.35 billion by 2023. Globally, it was worth circa. $28.5 billion last year and forecast to reach a little of $34.5 billion this year by data company Statista – year-on-year growth of over 20%.
For GLP’s part, the seller has stated that it will use the revenues generated to return value to shareholders, deleverage and also reinvest back into USA logistics property assets. Having gone private by de-listed from the Singapore stock exchange in 2018, GLP’s level of leveraging increased.