Global alternative assets giant Blackstone Group has agreed to acquire the US logistics assets of Singapore-based GLP for a record $18.7 billion, including debt, in what is perhaps the biggest private equity deal in the real estate sector.
For Blackstone, the deal forms part of its “highest conviction global investment theme” riding on growing e-commerce demand.
Blackstone and GLP announced the deal Monday after the world’s largest manager of alternative assets outbid California-based multinational REIT Prologis and Brookfield Asset Management, which separately submitted their interest for the assets totaling 179 million square feet.
The transaction, which will nearly double the size of Blackstone’s existing US industrial footprint, will involve Blackstone Real Estate’s global opportunistic BREP strategy and its income-oriented non-listed REIT Blackstone Real Estate Income Trust (BREIT).
BREP will acquire 115 million square feet of the urban, infill logistics assets for $13.4 billion while BREIT will acquire 64 million square feet for $5.3 billion.
GLP’s US business is the second-largest owner of warehouses in the country. It has almost 200 million square feet across some 1,350 properties. Among its largest tenant is Amazon.com Inc.
According to sources quoted by the Wall Street Journal, Blackstone previously owned about half of the properties it is acquiring from GLP. In 2015, GLP bought IndCor Properties, a portfolio of industrial warehouses that Blackstone assembled in the wake of the financial crisis, for $8.1 billion.
“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.
BREIT chairman and CEO Frank Cohen said the properties are a complementary addition to the Blackstone’s commercial real estate portfolio, which is oriented toward its “highest conviction themes”, such as logistics.
Blackstone’s real estate business has approximately $140 billion in investor capital under management. It operates around the globe with investments and people in North America, Europe, Asia, and Latin America. It has acquired over 930 million square feet of logistics globally since 2010.
Its trophy properties include Chicago’s Willis Tower and the Cosmopolitan of Las Vegas resort and casino.
The Blackstone-GLP deal eclipsed the 2012 sale of Archstone out of the bankrupt Lehman Brothers estate. The property was sold for $6.5 billion to Equity Residential and AvalonBay Communities in cash and stock.
A Bloomberg report in April said Blackstone has raised over $22 billion for its latest buyout fund. The firm expects to conclude the fundraising for what will be its eighth buyout fund later this year, according to sources.
Blackstone has not set a fundraising target, but it anticipates the buyout fund will overtake Apollo Global Management’s $24.6-billion fund as the largest ever.
GLP, the Singapore-based developer of logistics properties, has some $64 billion in assets under management in real estate and private equity funds. It was working with banks on a potential IPO of its US division in April but GLP chose to take the buyout route instead.
Its 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 modern logistics assets across 36 major markets.
GLP will remain invested in the US across real estate, technology, and credit.
“We are proud of the business our team built and are confident it will continue to flourish under Blackstone’s leadership,” said Alan Yang, Chief Investment Officer of GLP. “We are looking forward to expanding our footprint in the United States to continue to seize key opportunities in the US market.”
According to a Wall Street Journal report, GLP will keep a small footprint in the US, in addition to its substantial holdings in Asia, plus newer inroads into Europe and Latin America.
In January, GLP announced that it had sold five properties in Japan for approximately 89.8 billion yen ($821 million) as part of its capital recycling strategy. Tokyo Stock Exchange-listed Japanese real estate investment trust (GLP J-REIT) has obtained a right of first look on the sale assets via a bridge scheme.
The properties comprise 342,000 sq m of modern logistics facilities developed by GLP, including GLP Zama, one of its signature development projects in Greater Tokyo.