US private equity firm Blackstone has continued its spending spree on European logistics and emerged as the biggest buyer in the first half of this year following a string of deals spanning the UK, France, Germany and the Netherlands.
US private equity firm Blackstone has continued its spending spree on European logistics and emerged as the biggest buyer in the first half of this year following a string of deals spanning the UK, France, Germany and the Netherlands.
Altogether the company forked out over €1 bn on behalf of its European logistics platform Logicor, according to data compiled by PropertyEU Research.
The figure excludes the logistics assets from GE Real Estate’s European portfolio which Blackstone has said will be integrated into Logicor. Earlier this year, Blackstone clinched one of the largest global real estate deals since the 2008 crisis together with banking group Wells Fargo when it signed agreements to acquire most of the assets of GE Real Estate for about $23 bn (€21.7 bn). The logistics assets are located in France and Spain.
Blackstone has been one of the most voracious buyers of logistics assets in Europe since the onset of the global financial crisis. In 2014, the company spent €2 bn on the asset class, making it the second-largest owner and operator of logistics property in Europe. At the beginning of this year, Logicor’s property portfolio stood at over 6.7 million m2 compared to 3 million m2 at the beginning of 2014.
The biggest acquisition so far this year centred on 557,000 m2 of logistics assets in the UK which Blackstone acquired from a joint venture between funds managed by Oaktree Capital Management and Anglesea Capital. The investment volume was not disclosed but is believed to have been in the region of €500 mln.
The deal lifts Logicor’s UK holdings to 1.9 million m2. The portfolio of 16 warehouse properties is located in core logistics markets close to major urban centres across the UK, including Birmingham, Leeds and Oxford. The properties are leased to a diverse range of tenants such as Arcadia, B&Q, The Co-Operative, Debenhams and Unipart.
Strong presence in core European countries
Aside from the UK, Logicor has also consolidated its platforms in core countries in mainland Europe. In June, the company added another 19 assets to its logistics portfolio in France and Germany in a deal with Sydney-listed Goodman’s European Logistics Fund. The Shine portfolio comprises 10 sites in France, mainly located in Lille, Paris and Lyon, with a total area of 300,000 m2 and nine German logistics properties covering 179,000 m2.
The financial details were not disclosed but PropertyWeek put the price at €300 mln. The acquisition takes Logicor’s total distribution space in France to 2 million m2 and its German portfolio to 1.2 million m2.
The Shine deals follows another major German portfolio transaction in February involving 10 warehouse properties totalling 400,000 m2 of space in major urban centres including Düsseldorf, Munich, Berlin and Frankfurt. The assets were acquired from TREI Real Estate, the real estate management and development company of the Tengelmann Group.
A spokesman for Logicor declined to disclose financial details, but according to newswire Bloomberg, the 10 warehouse assets are valued at around €200 mln.
In the first half of the year, Logicor also added two Dutch logistics assets, totalling 65,400 m2, to its portfolio. The price was not disclosed, but PropertyEU Research has estimated the investment volume at €42.9 mln. Logicor's portfolio in the Netherlands now comprises 340,000 m2. The vendor was Euro Logistik 1, a fund managed by pan-European real estate investment manager Internos Global Investors. The two recently built warehouses are located in Roosendaal (between Antwerp and Rotterdam), and Rijnsburg (40 km north of Rotterdam).
IPO or strategic sale?
The spending spree is set to continue: Blackstone is also believed to be in advanced negotiations to acquire a €3 bn European portfolio in an off-market deal with Norwegian fund manager Obligo Investment Management. According to a news report by Estates Gazette, the portfolio has a broad geographic spread with assets in Norway, Sweden and Germany as well as elements in Denmark, France, Latvia and the UK.
Around a third of the portfolio is made up of logistics assets, which Blackstone plans to contribute to its Logicor platform. Blackstone declined to comment. Obligo was not available for comment.
The big question now is how will Blackstone exit the platform. Logicor’s CEO Mo Barzegar has said that an IPO of the unit is ‘a strong possibility’. ‘There is strong demand for listed companies in our sector, so listing would be one very viable option somewhere down the line,’ he told PropertyEU. ‘Blackstone’s goal is to create an enduring business, a leading pan-European logistics platform that offers the best quality service and value to its customers.’
He added that a sale to a strategic investor is also an option.
At end-2014, Blackstone Real Estate Partners sold its US logistics platform IndCor Properties for $8.1 bn (€6.6 mln) to Singapore’s sovereign wealth fund GIC. IndCor owns and operates a portfolio of industrial properties in the US covering a total area of 10.9 million m2. The sale has helped fuel speculation that Blackstone might eventually spin off its European logistics vehicle, Logicor, to a strategic buyer.
