Money continues to pour into warehousing. The investment company Blackstone announced on Monday (September 30) the purchase of another logistics property company, this time for $5.9bn. This new deal follows on from Blackstone’s purchase of GLP for $18bn and Dream Global for $4bn earlier in the year.
Today’s acquisition has been the purchase of the investment company Colony Capital’s logistics property portfolio, called Colony Industrial. This is described an “Industrial Platform” with a “last-mile light industrial portfolio [that] represents the substantial majority of the total transaction and comprises approximately 60 million sq ft of infill, logistics assets across 465 light industrial buildings in 26 US markets, with significant concentration in Dallas, Atlanta, Florida, northern New Jersey, and California.”
Blackstone explained their reasoning for buying Colony Industrial as demonstrating “our continued strong conviction in logistics and positive e-commerce trends. As retailers continue to shorten delivery times and expand their last mile footprints, we believe warehouses in dense population centres will continue to experience outsized demand growth.”
It is interesting that Colony Capital explain the reasoning for the sale as a wish to “transition to digital real estate and infrastructure”. This includes investing in the management of IT assets such as data centres and wireless aerials. Colony Capital has had some problems around its property portfolio, in particular the purchase of North Star, the European business of which it has also just sold.
Blackstone now has an enormous presence in the warehousing property sector, especially in North America. The ‘alternative’ investment company has made property one of its key bets in its investment strategy and logistics assets are possibly the most important part of this. It clearly believes that despite the huge amounts of capital entering the sector, that the expansion in demand for e-retailing will underpin the investments it is making, with ‘last-mile’ related transhipment and short-term inventory locations of particular interest. With the sort of resources that Blackstone has access to, it can afford to make it a long term bet.
Source: Transport Intelligence, October 1, 2019
Author: Thomas Cullen