Principal flips portfolio to Blackstone Group for $500M

Just one month ago, it bought out its former partner, Majestic Realty

Jonathan Gray and 18669 San Jose Avenue (Credit: Blackstone Group)
Jonathan Gray and 18669 San Jose Avenue (Credit: Blackstone Group)

Just a month after it bought out its former partner Majestic Realty‘s stake in 16 properties, Principal Real Estate Investors has churned a sizable profit on a portion of the assets.

Out of the 16 million square feet it owned with Majestic, Principal flipped a 4 million-square-foot portfolio to none other than private equity giant Blackstone Group for a whopping $500 million, the Wall Street Journal reported. The purchase includes warehouses, distribution centers and other industrial sites.

Principal Real Estate, a subsidiary of Principal Financial Group, announced it bought out Majestic’s 50 percent stake in their 16 jointly-owned commercial sites worth over $111.5 million in September. The exact amount Principal paid for the remaining stake was not disclosed.

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The two firms developed and jointly owned over 100 commercial properties since first partnering in 1971.

Principal Financial reported a $411 million after-tax net realized capital gain as a result of a real estate transaction in its third quarter earnings report released last week. It did not identify Blackstone as the buyer.

The recent purchase further expands Blackstone’s presence in the region. It paid $1.5 billion for a portfolio of West Coast logistics centers from LBA Realty just last year. It has been selling a solid chunk of logistics properties, too, including IndCor Properties for $8.1 billion and Logicor for $14.2 billion. The equity firm has also been keeping active on the commercial side – it sold 5670 Wilshire to Rockpoint Group for $215 million last month, one of many trophy office dispositions. [WSJ]Natalie Hoberman