At Blackstone Group, the world’s largest private equity firm with $512 billion in assets under management, few properties or companies are out of reach. So when the firm strikes a record-setting deal and anoints the sector as a top firmwide idea, it’s worth listening to.
In real estate, Blackstone is doing just that when it comes to logistics space, or the warehouses where the orders of Amazon and other e-commerce giants are delivered in bulk, sorted, and sent out to customers. On Sunday evening, the firm disclosed a $18.7 billion deal for the U.S. logistics assets of Singapore’s GLP, inking the biggest private real estate deal in history. And Blackstone isn’t coy about its optimism for the real estate that houses America’s increasingly e-commerce oriented supply chain.
“Logistics is our highest conviction global investment theme today, and we look forward to building on our existing portfolio to meet the growing e-commerce demand," Ken Caplan, co-head of Blackstone’s real estate business, said in a statement.
Merchandise sits on a shelving unit at the Amazon.com Phoenix Fulfillment Center in Goodyear, Arizona, U.S., on Monday, Nov. 16, 2009. Seattle-based Amazon.com, which started as a book seller, has expanded to products such as food and motor parts as
It’s a bold statement from Blackstone given that logistics space is probably only noticeable to the average American as they drive along the interstate, or make landings at airports on a clear day.
The warehouses Blackstone’s buying are often massive white windowless and logoless boxes, which are bigger than a football field. They sit adjacent to airport runways, highways, large ports, and rail hubs. Increasingly, inside these nondescript boxes is what looks like science fiction. Massive robots move and sort palettes of goods, drones check inventories, and orders are sifted and sorted on conveyors that have the sophistication of an automotive assembly line.
For Blackstone, Sunday’s deal is a major doubling down on the U.S. logistics market. Its $140 billion real estate investment arm rolled up logistics warehouse operators and formed Indcor, which it sold to GLP for $8.1 billion in 2015. The he firm’s real estate gurus set their sights on Europe, building pan-European giant Logicor into a $13.8 billion logistics behemoth that was sold to China Investment Corporation in 2017. In buying GLP’s U.S. business, Blackstone is bulking back up with familiar assets, acquiring some 179 million square feet of urban, infill logistics assets nationwide, doubling the size of its existing footprint. It also bought back a piece of Logicor from CIC in late 2017.
Blackstone global opportunistic real estate funds will acquire 115 million square feet of GLP space for $13.4 billion and its income-oriented non-listed real estate investment trust, BREIT, will acquire 64 million square feet for $5.3 billion. "Our global scale and ability to leverage differentiated investment strategies allowed us to provide a one-stop solution for GLP’s high quality portfolio," said Caplan.
Blackstone has its pick of real estate ideas to crow about.
It is one of the biggest office, hotel and single and multifamily property owners in the United States and globally. Its $140 billion portfolio contains 231 million feet of office space globally, 151,000 hotel room keys, 75 million feet of retail real estate, and 308,000 residential units and homes. It built and remains a top shareholder of Invitation Homes, a NYSE-listed single family landlord with a portfolio of 80,000 homes nationwide. In Chicago, Blackstone owns the Willis Tower and in Las Vegas it owns the trendy Cosmopolitan hotel and casino. By square footage, logistics space now appears to be Blackstone’s top holding.
The $18.7 billion price tag is coup for GLP, the seller. Based in Singapore, GLP is was co-founded by entrepreneur Ming Zei Mei, who spun out the international logistics space of Prologis, mostly based in China, Brazil and India. Now GLP, short for Globap Logistics Partners, operates 785 million square feet of space, with more than half in China.
Once listed in Singapore, GLP was taken private in 2017 by its co-founder and a consortium of Asian investors including HOPU Jinghua, founded by Goldman Sachs’ former China chairman, Hillhouse Capital and China Vanke Co. In addition to logistics space, GLP is becoming a force in real estate and private equity asset management, with $64 billion under its watch. For the firm, Sunday’s deal is a watershed, reportedly receiving interest from Prologis, a publicly trade real estate investment trust that is the leader in U.S. logistics space.
“GLP was able to leverage our deep operating expertise and global insights in the logistics sector within four years to build and grow an exceptional portfolio," Alan Yang, Chief Investment Officer of GLP, said in a statement. As it recycles capital, the firm remains bullish on the U.S. "We are looking forward to expanding our footprint in the United States to continue to seize key opportunities in the U.S. market,” Yang further said.
For more on Logistics:
Also see our mention of GLP in a bet Brookfield has made in China.