Blackstone has struck a deal to buy a group of industrial warehouses from Colony Capital for $5.9bn including debt, adding to the private equity firm’s burgeoning portfolio in logistics properties as it bets on the rise of ecommerce.
The deal is the latest in a flurry of multibillion-dollar transactions by Blackstone’s property arm, which in June clinched the largest private real estate deal in history with the acquisition of a US warehouses portfolio from Singapore-based GLP for $18.7bn.
Colony Industrial’s assets span 60m square feet across 465 light industrial buildings with a large concentration in Dallas, Atlanta, Florida, northern New Jersey and California.
“This acquisition of high-quality warehouses demonstrates our continued strong conviction in logistics and positive ecommerce trends,” Nadeem Meghji, head of real estate Americas at Blackstone, said in a statement on Monday.
Blackstone has been building out its portfolio of logistics properties in the US and Europe in anticipation of a warehouse boom fuelled by the rise of ecommerce giant Amazon. While other parts of the property industry have softened, demand for industrial real estate has ramped up, with vacancies at historic lows.
This month, Blackstone agreed to buy Canadian real estate investment trust Dream Global for C$6.2bn ($4.7bn), adding office space and warehouse properties in more than 100 cities across western Europe to its portfolio.
The private equity firm has amassed an €8bn portfolio of so-called last mile assets — properties located near urban centres that are in high demand because they cut delivery time — in Europe, the largest in the region, which is housed in a separate company called Mileway. The properties also include dark kitchens that produce orders for food delivery used by companies such as Deliveroo.
Blackstone predicts that the level of ecommerce and food delivery in Europe will approach levels in the US and Asian countries such as China and South Korea.
A nearly decade-long boom in real estate has swelled Blackstone’s property fund to $154bn, making it the second-largest of the firm’s four main investment strategies after private equity.
Some real estate investors see trouble ahead as money floods into the sector, but Blackstone has continued raising cash, setting a new record for real estate fundraising in September with $20.6bn in commitments to its property arm.
Ken Caplan, global co-head of Blackstone real estate, has called the private equity group’s foray into logistics its “highest conviction” trade.
Colony Capital, still reeling from a disastrous merger with rival Northstar, had come under pressure from activist investor Blackwells Capital to sell non-core assets. The firm is expected to receive more than $1.2bn in proceeds from the sale of Colony Industrial.