BX Blackstone Inc

By Liz Hoffman, Miriam Gottfried and Cara Lombardo 

Blackstone Group LP is buying a network of U.S. industrial warehouses from Singapore-based GLP for $18.7 billion, in the largest private real-estate transaction ever that represents a bet on the continued explosion of e-commerce.

The companies announced the deal Sunday, following an earlier Wall Street Journal report. Blackstone outbid real-estate company Prologis Inc. for the roughly 180-million-square-foot portfolio, according to people familiar with the matter.

The deal price includes about $8 billion of debt, one of the people said, which Blackstone plans to refinance.

The portfolio includes about 1,300 properties across the country, many of them near population centers. GLP had been gearing up to take its U.S. business public later this year, the Journal reported in April, but drew buyout interest and chose to take that route instead.

GLP will keep a small footprint in the U.S. in addition to its substantial holdings in Asia, plus newer inroads into Europe and Latin America. Alan Yang, GLP's firm's chief investment officer, said he is looking forward to expanding in the U.S., where warehouse ownership remains fragmented.

The rise of Amazon.com Inc. -- GLP's biggest tenant -- and other e-commerce companies has spurred demand for industrial warehouses. Valuations of publicly traded warehouse owners have surged in some cases by 30% this year. Particularly prized are properties near big cities, which help solve the "last-mile" puzzle posed by a move toward next-day delivery.

Nadeem Meghji, whos runs Blackstone's U.S. real-estate investing activities, said GLP fit with the firm's focus on "large scale, high conviction, thematic investing."

The deal will make Blackstone one of the largest owners of U.S. logistics properties, expanding its holdings by more than one-third to about 750 million square feet. The firm is already a global real-estate giant with about $140 billion of assets, including trophy properties like Chicago's Willis Tower and the Cosmopolitan of Las Vegas resort and casino, and thousands of single-family homes.

Blackstone previously owned about half of the properties it is buying as part of the deal, some of the people said. It sold IndCor Properties Inc., a portfolio of industrial warehouses it assembled in the wake of the financial crisis, to GLP in 2015.

GLP executives -- including several Blackstone alumni who helped build IndCor -- subsequently sold about $1 billion worth of properties and made two major acquisitions. Four years later, they are striking the largest private real-estate deal in history, eclipsing the 2012 sale of Archstone out of the bankrupt Lehman Brothers estate.

Blackstone said it would divvy up the assets, putting about two-thirds into its opportunistic real-estate strategy and the remainder into its private real-estate investment trust. The assets headed for the REIT, which is open to retail investors, have longer-term leases and throw off a steadier stream of cash.

Write to Liz Hoffman at liz.hoffman@wsj.com, Miriam Gottfried at Miriam.Gottfried@wsj.com and Cara Lombardo at cara.lombardo@wsj.com

(END) Dow Jones Newswires

June 02, 2019 22:21 ET (02:21 GMT)

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