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Robert.Jervis_43227 Jun 07

Blackstone spends $18bn on US warehouses

Blackstone spends $18bn on US warehouses image

Vote of confidence in logistics, especially that driven by e-retailing

The US private equity company Blackstone has just agreed an $18.7bn deal to purchase 179m sq ft of warehousing space in the US in a move that represents a vote of confidence in logistics, especially that driven by e-retailing.

Blackstone, which also owns Multimodal organiser Clarion Events, has bought the assets from GLP, originally Global Logistics Partners, which is based in Singapore. GLP grew in great part by buying the property assets of the old ProLogis in China and other emerging economies. It then expanded into the US by buying IndCor for $8bn, originally owned by Blackstone. Presumably the sale is motivated by a wish by GLP to reallocate capital to other markets, especially in Asia. However, GLP will retain $8bn worth of property in the US although this appears to have less logistics exposure.

It a statement explaining the logic of the deal, Ken Caplan, Global Co-Head of Blackstone Real Estate observed that “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.” The purchase represents a doubling of Blackstone’s logistics property assets.

The sector has undergone a boom over the past decade as the need for e-retail fulfilment centres has grown. The GLP business in the US had exposure to this, with Amazon being a key customer.

Blackstone has long been an investor in the sector, buying up much of the old Prologis and selling it on as IndCor and Logicor. It has acquired over 930m sq ft of logistics in the past decade although not all of that is in the US.

Obviously, the key question around this transaction is the immediate prospects of the fulfilment centre property market. In the US, but also other markets, there has been an expansion in supply. If the growth of e-retailing slows, conceivably the price of property may fall. However, in the longer term it appears that major investors, such as Blackstone are confident of continuing need for the right kind of logistics inventory and handling locations.

Source: Transport Intelligence -