Blackstone Extends Warehouse Bet in $5.9 Billion Colony Deal
Blackstone to Buy Colony Capital Warehouses for $5.9 Billion
(Bloomberg) -- Blackstone Group Inc., which has acquired more than 1 billion square feet of logistics space since 2010 as part of the firm’s global focus on e-commerce, is extending its bet on last-mile real estate.
The private equity giant agreed to buy Colony Industrial, the warehouse unit of Colony Capital Inc., for $5.9 billion. The deal includes about 60 million square feet of warehouse space across 465 light industrial buildings in 26 U.S. markets, as well as an affiliated operating platform, according to a statement Monday.
The unit’s properties mostly serve as the last mile of the logistics chain and are crucial for companies seeking to make speedy deliveries to consumers.
“We’ve been the big buyer of warehouses around the world, probably bought $70 billion, on the simple premise that goods are moving from physical retail to online retail,” Blackstone President Jonathan Gray said in a Sept. 25 interview at the Bloomberg Global Business Forum.
The agreement follows Blackstone’s acquisition of $18.7 billion of warehouses from Singapore’s GLP Pte. earlier this year, and its $7.6 billion purchase of Gramercy Property Trust in Oct. 2018. The firm has added more than 360 million square feet of U.S. industrial space over the last two years, according to Bloomberg Intelligence analyst Lindsay Dutch, building a portfolio to rival warehouse giant Prologis Inc.
“Blackstone may eventually take its U.S. warehouse portfolio public, as it did with Invitation Homes, the largest single-family REIT, in 2017 and Brixmor, the second-largest owner of open-air strip centers, in 2013,” Dutch wrote in a note.
Blackstone Expands Industrial Empire Further
U.S. industrial rents increased faster than expected in the first half of 2019, according to an August report from Green Street Advisors. Slowing trade and manufacturing growth could slow rent hikes in 2020, but investor demand remains “fervent across all transaction sizes,” the report said.
Colony Capital, which acquired industrial buildings as recently as March, is shedding traditional commercial real estate and investing in data centers and cell towers. The company wants such digital assets to account for 90% of its investments, executives said at an industry conference this month.
The deal is expected to be completed in the fourth quarter, according to the statement. The Wall Street Journal reported the acquisition earlier Monday.
To contact the reporter on this story: Patrick Clark in New York at pclark55@bloomberg.net
To contact the editors responsible for this story: Rob Urban at robprag@bloomberg.net, Steve Dickson
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