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The Real Deal Los Angeles

Blackstone acquires $1.5B worth of West Coast logistics centers

Fund manager buys 12M sf portfolio from Irvine Realty

September 21, 2016 10:30AM

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Blackstone's Jonathan Gray and LBA Logistics Center at 8311 Central Avenue in Newark, California

Blackstone’s Jonathan Gray and LBA Logistics Center at 8311 Central Avenue in
Newark, California

From the New York website: Betting on the continued strength of e-commerce, the Blackstone Group agreed to pay $1.5 billion for a logistic center portfolio, the bulk of which are located on the West Coast. 

The properties total 12 million square feet. California-based investment firm Irvine Realty is the seller.

Investors have doubled down on logistic centers in recent years amid the rise of e-commerce, which needs these centers to store goods and bring them to consumers.

“Distribution used to be just another part of the supply chain,” said Charles Sullivan, president of U.S. operations for logistic-center owner Global Logistic Properties, told the Journal. “Now logistics has moved up in its importance in corporate strategy.”

Logistic-centered real estate investment trusts saw their average returns grow 4.8 percent over the past year – the third-highest growth rate among all REIT categories, according to Green Street Advisors.

The deal marks Blackstone’s first big bet on the sector since it sold IndCor Properties for $8.1 billion last year. The fund manager also owns 150 million square feet of logistics properties in Europe.

The deal carries risk. Analysts told the Journal that a wave of new supply could push down logistic centers’ returns, while e-commerce remains largely unprofitable. [WSJ] — Konrad Putzier  

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