Blackstone Adds West Coast Warehouses, Boosting Industrial Bet
(Bloomberg) -- Blackstone Group Inc. is acquiring a majority stake in dozens of warehouses, boosting its bet on industrial properties as investors increasingly target a corner of commercial real estate that has fared well in the pandemic.
The firm’s nontraded real estate investment trust, BREIT, is taking a 60% stake in 71 warehouses owned by LBA Logistics with a gross value of $1.6 billion, according to a statement Friday.
The properties, mostly in California and Seattle, are primarily in “last mile” locations close to consumers, Blackstone said. The rise of online shopping, which has accelerated during the pandemic, has fueled investor interest in warehouse and logistics properties. That’s driven up prices, even as other commercial real estate sectors have struggled.
Blackstone spent billions of dollars before the pandemic in a long-term bet on warehouses. The asset manager has focused its acquisitions on heavily populated areas where it’s tougher to build, said Nadeem Meghji, Blackstone’s head of real estate in the Americas.
“It’s difficult to accumulate scale in these dense, West Coast geographies,” he said. “That’s what makes this opportunity so unique.”
Industrial properties made up about 35% of BREIT’s portfolio at the end of 2020, Blackstone said in a letter to investors this week. That concentration helped propel a 6.1% return for the vehicle last year, compared with a 5.5% decline for a Bloomberg index of U.S. REIT stocks.
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