The Real Deal New York

Blackstone to buy $1.8B industrial portfolio

Properties house tenants such as Amazon, FedEx and Coca-Cola: SEC filing
By Christian Bautista | December 20, 2017 06:24PM

The Blackstone Group, America’s largest private landlord, is buying a 22 million-square-foot industrial portfolio for $1.8 billion, according to documents filed by the company with the Securities and Exchange Commission.

The seller is Cabot Properties, a Boston-based private equity firm that assembled the package through its Industrial Value Fund IV.

Blackstone signed a contract to buy the package on Dec. 19, according to the SEC filing. The portfolio covers 146 properties concentrated in Chicago (four million square feet), Dallas (3.2 million square feet), Baltimore/Washington DC (1.9 million square feet), Los Angeles (1.1 million square feet), South Florida (1.1 million square feet), and New Jersey (945,000 square feet). It is currently leased to 377 tenants, including firms such as Amazon, FedEx, Coca-Cola, Fiat Chrysler and the US Government.  The properties have an occupancy rate of 90 percent.

The deal was reported by Real Estate Alert earlier this month. Blackstone plans to finance the acquisition with a combination of cash-on-hand and property-level debt. The company is negotiating with lenders for the property-level loans, and expects to close on the package by March or April of 2018.

Last February, Cabot sold a 184-property industrial portfolio to DRA Advisors for $1.07 billion. That package contained buildings that ranged in size from 15,000 square feet to 925,000 square feet.

Blackstone was one of the players competing to buy a warehouse-focused real estate investment trust Global Logistic Properties, though it lost the deal to a Chinese buyout group that paid $11.6 billion for the package in July.

“It’s hard not to be enthusiastic about logistics,” Blackstone’s real estate head Johnathan Gray said in April. But some investors see looming threats to the logistics craze, such as the potential for many e-commerce companies to go bust, and rising interest rates.

Average cap rates for U.S. industrial properties fell to 4.8 percent at the end of 2016, according to JLL, and the spread between cap rates and 10-year Treasury yields fell to 2.36 percentage points.