Wednesday, April 17, 2024
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HomeReal Estate NewsCommercialPrologis to acquire some of Blackstone industrial portfolio for $3.1B

Prologis to acquire some of Blackstone industrial portfolio for $3.1B

Real Estate Investment Trust Prologis Inc. and real estate investor Blackstone recently announced a definitive agreement for Prologis to acquire the latter’s nearly 14 million square feet of industrial properties from opportunistic real estate funds affiliated with Blackstone for $3.1 billion, funded by cash.

The acquisition price represents an approximately 4% cap rate in the first year and a 5.75% cap rate when adjusting to today’s market rents.

Prologis currently owns 1.2 billion square feet of logistics real estate in 19 countries. With this acquisition, the company will expand its footprint in several key markets including Atlanta, the metro Washington, DC area, California (southern CA Central Valley, San Francisco Bay area), Dallas, New York metro area, Phoenix and south Florida. Prologis plans to hold all of the properties acquired. This deal expands the firm’s relationship with 50 existing customers and adds 77 new customers.

“We’re pleased to be working with Blackstone on this deal,” said Prologis President Dan Letter.  “These high-quality properties are complementary to our portfolio and fit perfectly into our long-term strategic plan for growth. The acquisition demonstrates our unique ability to add significant scale to our portfolio – expanding customer relationships and increasing opportunities for our growing Essentials platform.”

The deal comes at a time where most CRE sectors have been hurt by higher interest rates, which have increased developers’ and investors’ borrowing costs, the Wall Street Journal reports. However, the industrial space has survived this challenging time in the industry, due to demand for industrial space remaining high and increased online shopping numbers.

Meanwhile, approximately 60 percent of the portfolio Prologis is acquiring are properties in cities or are near customers. E-commerce tenants value these properties greatly because the location makes it easier to deliver packages within days of them being ordered.

The firms have completed more than a dozen deals together during the past 11 years. Leadership at each company said it values the relationship and the opportunities it creates to execute on their respective strategies across markets and cycles.

“Where you invest matters, and this transaction demonstrates the exceptional demand for high-quality warehouses,” said Nadeem Meghji, head of Blackstone Real Estate Americas. “With near record low vacancy, logistics remains a high conviction theme for us; we are proud owners of $100 billion of warehouses in North America and $175 billion in total around the world. And, of course, Prologis is a world-class company that knows this space as well as anyone.”

 

 

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