Here’s a look at Blackstone’s industrial plays after its record-breaking portfolio purchase

Industrial portfolio deals are on pace to break a record this year, data shows

TRD NATIONAL /
Oct.October 11, 2019 12:31 PM
Blackstone's Jonathan Gray (Credit: Getty Images and iStock)

Blackstone’s Jonathan Gray (Credit: Getty Images and iStock)

After Blackstone dropped almost $19 billion on an industrial portfolio in June — the biggest portfolio deal ever — the private equity giant’s industrial activity hasn’t let up.

In the months following that deal with Singapore-based GLP, Blackstone’s industrial plays in the U.S. have ranged from one-off property acquisitions to a partial selloff of that newly-acquired portfolio.

In another show of its interest in the sector, Blackstone also launched its own logistics firm overseas.

The deals come at a time when industrial real estate remains a strong draw nationwide, particularly among institutional players. Investors and developers are turning to logistics centers and warehouses to get in on the e-commerce and storage boom and provide a hedge against an economic contraction. Markets like New York, Los Angeles and Chicago have seen a surge in industrial investment.

And Blackstone remains bullish.

“As retailers continue to shorten delivery times and expand their last-mile footprints, we believe warehouses in dense population centers will continue to experience outsized demand growth,” said Nadeem Meghji, head of real estate Americas in the firm’s Sept. 30 announcement of one such portfolio deal.

A couple of months after Blackstone announced its massive deal with GLP, the private equity player bought part of TA Realty’s industrial portfolio. Blackstone picked up 68 properties spread across 10 high-growth markets around the country, and AEW Capital Management, in a separate transaction, acquired 28 Texas-based holdings. Combined, the deals totaled $1 billion, though Blackstone has not provided additional details.

A few weeks later, Blackstone said it was buying Colony Capital’s 60 million-square-foot national warehouse portfolio. The price tag was $5.9 billion, and the properties are located in northern New Jersey, Atlanta and around California, among other places.

In New York, the increased appetite for industrial properties near major urban centers has led developers to construct multi-story warehouses. “The solution has been to go up, and it’s unprecedented,” said Marcus & Millichap commercial broker Jakub Nowak. Chicago and L.A. also rank among the top cities for industrial investment.

For its portfolio deal earlier this month, Blackstone sold off a chunk of its GLP mega-portfolio to Nuveen, the real estate investment arm of pension fund TIAA. The 100 properties are spread across 29 million square feet in major cities around the country, again in places like northern New Jersey and California. The transaction was valued at $3 billion.

Blackstone also has continued to pick off industrial buildings in smaller portfolios and other one-off deals. In August, the firm paid $56 million for a trio of warehouses near Miami International Airport. It also picked up another property in South Florida — a 9.2-acre site for $9.6 million.

Single-asset purchases of industrial buildings were up 6 percent year to date in August from the same period in 2018, though portfolio deals were down 2 percent, according to data from research firm Real Capital Analytics. But that figure did not include Blackstone’s GLP acquisition, which closed at the end of September and alone represents a usual quarter’s worth of activity, said Jim Costello, senior vice president at RCA.

“The deal activity is down in terms of what had closed…but the point was everybody knew something big was in the works and was coming soon,” he said.

Hunger for more

Demand has outpaced supply in the industrial sector for almost the past decade, said Marcus & Millichap commercial broker Jakub Nowak.

“It’s no surprise we’re seeing a lot of institutional capital keen on pursuing these types of deals,” he said.

Institutional players were second to private buyers of industrial assets in August, according to RCA; the data does not include the Blackstone/GLP deal. But the amount that private players have shelled out for the properties dropped 7 percent year over year.

Meanwhile, institutional funds have seen their spending increase 28 percent, and their deals are, on average, valued at around $21.5 million each. The average size of a private investor’s deal was just $7.6 million.

The industrial demand has been driven largely by the growth in e-commerce spending, a trend experts don’t see abating any time soon.

Aside from buying and selling last-mile logistics centers, Blackstone also recently launched its own company focused on those properties. In September, the firm touted the start of Mileway, which owns and operates 1,000 last-mile logistics properties across Europe. Blackstone slowly acquired the buildings through real estate funds over several years.


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