Blackstone Group LP doubles to industrial real estate by purchasing Gramercy Property Trust, the second billion-dollar takeover of a warehouse in so many weeks that e-commerce growth has increased demand.
Blackstone Real Estate affiliates Partners VIII agreed to pay $ 27.50 in cash for each Gramercy share in a $ 7.6 billion transaction, according to a statement on Monday. The price per share is 1
The shift to online shopping has increased the need for retail warehouse space to expand their digital business and shorten delivery times. This has lured investors into logistics real estate at a time when sales of other commercial real estate have slowed in the context of rising interest rates and a decline in foreign investment. According to research firm Real Capital Analytics Inc., industrial property purchases increased 34 percent year-on-year in the first quarter to $ 20.9 billion. Last week, Prologis Inc., the world's largest warehouse owner,  agreed to acquire DCT Industrial Trust Inc. for $ 8.4 billion in shares and assumed debt. Shopping at Amazon.com Inc. and other Internet retailers still accounts for less than 10 percent of US retail sales, but e-commerce is reconfiguring supply chains.
"The quickest way to gain access to more warehouses is to buy companies that own them, rather than going through the development process," said Lindsay Dutch, an analyst at Bloomberg Intelligence. The Gramercy deal "is further proof of how strong demand is."
The stock market has penalized all types of real estate investment trusts and valued their holdings well below market valuations. Investors like Blackstone are in a good position to grab assets at a discount, Dutch said. Warehouses in places like New Jersey and Southern California are particularly prized for their proximity to heavily populated areas.
Industrial REITs remain one of the few real estate asset classes to experience "real market rental growth" based on fundamentals As analysts told SunTrust Robinson Humphrey, led by Ki Bin Kim, in a statement to clients on Monday :
Blackstone, the world's largest private equity owner of real estate, has stepped up its purchases in recent months. In March, the New York-based company raised 22 million square feet (2 million square meters) when it purchased the Canyon Industrial Portfolio for approximately $ 1.8 billion. This transaction followed an agreement dated January to acquire Canada's Pure Industrial Real Estate Trust in a $ 2.48 billion deal.
Including Gramercy, Blackstone has acquired and manages more than 580 million square feet of industrial space since 2010, according to one person, who knows about this matter, continues to have over 450 million square feet.
Among industrial real estate from which the company has split is the European logistics company Logicor, which it has agreed to China Investment Corp. for 12.25 billion euros (14.6 billion US dollars) in the largest deal in the region for sale. Blackstone later bought back a 10 percent stake.
Real estate investment trusts, the rented space in warehouses and logistics centers have outperformed those focused on shopping centers, rental housing or office buildings. Industrial Buildings rose 11 percent in April over the prior year, outperforming other types of commercial real estate, Green Street Advisors LLC said last week.
Blackstone has bought properties that are predictable For about two years, the company has raised $ 15.8 billion for Blackstone Real Estate Partners VIII – the Gramercy-earning unit – making it the largest real estate private Equity Fund in Record Time
The fund had $ 8.9 billion to spend by October 2020, and its net internal rate of return is 17 percent, according to a March 31 investor statement. Its strategy is to acquire high quality assets from prime markets through "large, complicated situations in which competition is limited," according to a presentation by Pennsylvania Public School Employees' Retirement System.
Th The Gramercy deal is expected to be completed in the second half of the year. Gramercy shareholders will be entitled to receive the previously announced dividend of 37.5 cents per share on July 16.
Gramercy was advised by Morgan Stanley, Eastdil Secured LLC and Wachtell, Lipton, Rosen & Katz. Blackstone was acquired by Citigroup Inc., Bank of America Corp. and Simpson Thacher & Bartlett LLP.
– With the support of Brandon Kochkodin and Gillian Tan