Blackstone Group is going aggressive with its e-commerce bets. In a US$18.7 billion deal, they are acquiring Singapore GLP’s US logistics assets.
This is being tagged as the biggest real estate deal in the world in the private-equity space.
As a part of the deal Blackstone will add 179 million sq ft of logistics assets in urban areas. The New York based group in a statement said that this acquisition will allow it to increase its footprint in the industrial sector in United States.
The need for warehouse space has been growing exponentially in the recent years with online shopping booming around the world.
Online retailers need more warehouse space to reduce their delivery times. This has served as big incentive investors to enter the logistic real estate space.
At a time when other types of commercial assets aren’t offering favourable returns with higher interest rates, the logistic space has been heating up.
This sale coincides with the fundraising record in the private-equity real estate fund space where we have seen a number of deals for warehouses.
Last year Blackstone has picked up the entire portfolio of last mile properties from Canyon Industrial for US$1.8 billion.
Over the last few years the company has picked up several properties in the logistic area.
As the largest manager of alternative asset in the world they also agreed to pick up Pure Industrial Real Estate Trust from Canada last year in a deal that was being estimated at S$2.54 billion.
They also are buying endowment from Harvard University for US$950 million which they had agreed on in September last year.
The Group has been growing aggressive in the last few years and particularly focusing on last-mile warehouses.
This has been one of the boom areas as most e-commerce companies look to reduce delivery times.
Bloomberg Intelligence had recently reported that the last mile delivery is becoming the major differentiator as far as driving revenues are concerned.
Analyst Jennifer Bartashus at Bloomberg says that most online retailers are currently focussed on deliver and working the chain backwards.
She added that in today’s competitive space making the delivery status transparent is vital for success.
Companies that are able to offer a better experience to their customers are the ones that are doing well and enjoying customer loyalty.
The sales and the revenues are growing even amidst the trade war crisis with China.
The total sales online for the first quarter of 2019 has been US$137.7 billion which is 3.6% up from the last quarter of 2018 according to the data released by the US Department of Commerce.
However, the total retail sales during the same period remained unchanged at US$1.34 trillion.
Blackstone Real Estate’s global co-head, Ken Caplan said that logistic is now the focus area of for the company and they look to build a portfolio that would cater to the growing need of the ecommerce companies.
According to a report in the Wall Street Journal the GLP portfolio would give Blackstone estimated 1,300 properties and Amazon is among its biggest tenant.
Peter Peterson and Stephen Schwarzman had co-founded Blackstone in 1985 and since then the company has become one of the major buyout firms in the world along with Carlyle Group and KKR & Co.
Earlier in April the firm had reported that it was managing US$512 billion worth of assets and this is the first time that the group is managing assets more than US$500 billion.
Blackstone has been making the biggest news among the private equity firms for almost a decade.
It has been involved in four out the six largest acquisitions in this market during this period.
It has acquired Gramercy Property Trust for US$7.2 billion last year.
In 2015 it had also picked up Strategic Hotels and Resorts for US$5.6 billion.
They are currently looking to raise US$5 billion for the latest deal according to people aware of the matter. The group has also set US$25 billion cap for the latest flagship acquisition fund and this would surpass over the US$24.7 billion fund from Apollo Global Management.
Blackstone successfully won in GLP’s asset auction where there were multiple bids including those from Brookfield Asset Management and Prologis.
Blackstone Real Estate Income Trust will take 64 million sq ft of the assets for US$5.3 billion while BREP will take up 115 million sq ft of the space for US$13.4 billion