NEW YORK–Blackstone Real Estate Partners VIII has entered into a contract to buy a 41-asset industrial warehouse portfolio from the Jacksonville, FL-based FRP Holdings for $358.9 million. The properties are mainly located in the Baltimore, Philadelphia and Washington, DC markets. The transaction, subject to customary closing conditions including shareholder approval, is expected to close in the second or third quarter of 2018.
With this deal Blackstone appears to be doubling down even harder on the industrial asset class. Earlier this month, Blackstone REIT acquired a 22-million square foot industrial portfolio for approximately $1.8 billion and financed it with a $1.1 billion loan from PGIM and NYSTRS. The transaction tripled its holdings in the industrial space.
As for FRP, one of the drivers of the deal was the new tax law. “The reduction in corporate income tax rates in a low cap rate environment created too good an opportunity to forgo,” FRP CEO John D. Baker II said in a prepared statement. “We look forward to redeploying these proceeds in our other business segments including Anacostia, land development, and mining/royalties segments where more recently we have enjoyed more favorable returns,” he said.
Among its holdings is 6 acres on the Anacostia River that are adjacent to the Washington National's baseball park in Washington DC's southeast district. It also owns several other parcels of land that, according to the company's website, it is “continuously entitling and developing” and “that are at various stages of their development, from 'highest and best use' studies to income producing ground rents.”
Eastdil Secured was FRP's broker in the sale, and Houlihan Lokey Capital served as its financial advisor. Nelson Mullins Riley & Scarborough served as legal counsel to FRP, and Simpson Thacher & Bartlett served as counsel to Blackstone on the transaction.
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Erika Morphy
Erika Morphy has been writing about commercial real estate at GlobeSt.com for more than ten years, covering the capital markets, the Mid-Atlantic region and national topics. She's a nerd so favorite examples of the former include accounting standards, Basel III and what Congress is brewing.
