Blackstone seals record $18.7bn private real estate deal

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Blackstone has struck the largest private real estate deal in history, with the alternative investment manager agreeing to buy the US warehouses portfolio of Singapore-based GLP for $18.7bn, including debt. The transaction, announced on Sunday, follows a prolonged bidding war for the asset against Prologis, said one person informed about the deal.  GLP’s collection of industrial warehouses across the US, comprising about 1,300 properties, will further expand Blackstone’s real estate business and solidify the US group’s position as one of the world’s largest diversified property owners.  Once the deal is completed, Blackstone will add about 179m sq ft of urban logistics assets, nearly doubling its existing US industrial footprint. Globally, the US group has acquired over 930m sq ft of logistics since 2010.  Blackstone’s acquisition comes at a time of growing interest in warehouse and logistics businesses as investors bet on the rise of online shopping. Amazon, the world’s largest ecommerce company in terms of revenue, is GLP’s largest tenant. “Logistics is our highest conviction global investment theme today, and we look forward to building on our existing portfolio to meet the growing ecommerce demand,” said Ken Caplan, global co-head of Blackstone real estate. GLP will use gains from the sale “to return significant value to their investors and for further reinvestment in the US,” said a person familiar with the company’s thinking. Stephanie Lau, a senior analyst at Moody’s, said that if gross proceeds — which she said total about $1.87bn considering GLP’s 8-10 per cent stake in the three funds sold to Blackstone — were used for deleveraging, “obviously it would be a credit positive”. “The company has been seeing higher leveraging after privatisation,” said Ms Lau, referring to GLP’s delisting from the Singapore Exchange in January 2018. According to Moody’s calculations, GLP’s net debt at the end of last year was 13 times ebitda on a look-through basis. “We are looking for the company over time to deleverage towards around nine times or thereabouts,” she added.  GLP, which is controlled by a consortium of Chinese investors, had explored listing its US unit, according to people informed about the matter. “GLP’s initial strategy was to pursue an IPO,” said one of the people. “However, it soon became clear that this transaction with Blackstone would provide the best value for GLP’s investors.” As part of the GLP deal, Blackstone, which will also assume $8bn in net debt, will split the acquired assets into two different units controlled by the US group.  Following the sale of most of its US assets, the Singapore-based company will focus primarily on expanding in China, Latin America and Europe. Blackstone sold its European warehouse company Logicor to China Investment Corporation, the Asian country’s sovereign wealth fund, for €12.25bn in 2017.

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