Blackstone Previously Owned Majority of Space in $18.7B GLP Industrial Asset Purchase

NEW YORK CITY—Blackstone’s purchase of 179 million square feet of urban logistics assets from GLP for $18.7 billion broke the record as the largest private real estate transaction globally. The private equity, alternative asset management and financial services company is focusing on logistics, building their portfolio in response to growing e-commerce.

The CoStar Group, a leading commercial real estate research and analytics firm, took a closer look at the deal, including the properties at stake. CoStar’s senior consultant Andrew Rybczynski says their records indicate Blackstone previously owned approximately 55% of the square footage of the portfolio that they acquired in June.

He notes in Q1 2015, Blackstone sold 1107 buildings, chiefly industrial, to GLP for $8.1 billion. Of these buildings GLP still owned 983 properties, in the interim having sold some of the assets in small portfolio and individual deals. With the recent $18.7 billion deal, Blackstone paid approximately $10.2 billion to buy back remaining assets that they had sold to GLP in 2015.

“This means that industrial is still a hot property type,” says Rybczynski. “We’ve found over the past eight years industrial portfolios have outperformed the typical market. It means a transfer of a lot of retail sales what we consider ‘bricks’ is moving into the ‘clicks’ category—e-commerce. Blackstone is essentially following the money and going towards where the customers are.”

Rybczynski additionally notes that the new product that has been added to the portfolio points more towards distribution and logistics buildings than with their initial sale. Although the media often lumps together industrial as one asset class, the senior consultant says there is a significant distinction between warehouse and distribution facilities.

“The initial portfolio was 57% warehouse versus 25% distribution. That tells us those buildings tended to be a bit older and not as well situated for fast throughput. The initial sale also included some manufacturing and a little bit of service and showroom type buildings, things that were a bit outside the scope of distribution. Whereas this new part of the portfolio is 50% distribution and about 45% warehouse—almost exclusively distribution and warehousing,” says Rybczynski.

He notes the largest buildings in the recent acquisition, two 1.5 million square-feet buildings that belonged to Whirlpool were also in the initial portfolio. They are distribution properties as are all 10 of the largest buildings in the deal.

As to any competitors in the industrial purchasing space, the CoStar pro comments that Blackstone is blowing everyone else out of the water. He states companies including Prologis and Duke have comparable US industrial portfolios but they tend to develop the properties rather than buy them.

Finally, Rybczynski observes that the initial portfolio that Blackstone sold had more of a West Coast tenor, focusing on the Long Beach and Los Angeles area. The recently traded portfolio has more of a Southeast feel to it. “It’s important to note because this newer portfolio focuses more on areas of growth in terms of population as well as adjusts for the Panama Canal expansion,” he adds.