Blackstone Buys Into LBA Industrial Portfolio for $1.6B

Blackstone REIT and LBA Logistics have partnered to recapitalized industrial properties. BREIT acquired a 60% stake in two in two industrial portfolios owned by LBA in a deal valued at $1.6 billion.

The two portfolios total 71 properties and 9.5 million square feet. The properties are located in predominantly in last mile locations in West Coast markets, specifically in Seattle and California. These are two of the top performing industrial markets in the country, and unsurprisingly, the portfolio is 95% occupied.

With this transaction, 35% of BREIT’s real estate portfolio is allocated to industrial product. During the pandemic, several major institutions have increased exposure to the indusial sector, particularly in high-quality logistics and ecommerce markets. Brian Kim, head of acquisitions and capital markets for BREIT, said that logistics properties are the top investment priorities globally. This acquisition is a quintessential example of the firm’s investment strategy and execution. LBA managing partner Phil Belling added that the firm plans to continue to expand its partnership with Blackstone.

There is good reason for the industry’s fervent bullishness on the industrial sector. Despite the pandemic and market downturn, industrial absorption has performed well in 2020. A recent report from Colliers International shows that industrial absorption outpaced new deliveries last year. US industrial inventory increased by 2.4% in 2020, while national absorption increased 3.3%, the report says.

In total, the industrial market supply in the US grew by 225 million square feet, a 27% increase over 2019. Emerging markets were central to this trend. Dallas-Fort-Worth, Indianapolis, Houston, Columbus and Phoenix were at the top of the list new deliveries this year. In each market new supply increased by a minimum of 3%. These markets also led occupancy gains for the nation. Only a handful of markets experienced occupancy losses, including South Florida, Chicago, Charlotte, the San Francisco Bay Area and the Greater Los Angeles Area. However, select markets—namely Milwaukee, Cleveland, Seattle and Tampa Bay—had occupancy gains above 50%.

Strong industrial fundamentals have lead to a slew of impressive industrial deals. This trend culminated at the end of last year, but has clearly continued into 2021. Some of the most notable recent transactions include KKR’s acquisition of an $800 million 100-property industrial portfolio; Crow Holdings partnership with Allianz Real Estate to acquire a 49% stake in a 19-asset, 6.1 million-square-foot US industrial portfolio developed by Crow Holdings; and Rexford Industrial Realty’s acquisition of an 18-asset industrial property portfolio for $154.6 million.