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Blackstone Plans $6.8 Billion European Urban Warehouse Unit

The private equity firm would like to pull its European warehouse properties to create a new company.

(Bloomberg)—Blackstone Group LP plans to pool 6 billion euros ($6.8 billion) of its smaller European warehouse investments in a new company that will ultimately be publicly listed or sold.

The private-equity giant is in the process of hiring an executive to run the company, which will manage its holdings of logistics properties close to towns and cities, according to people with knowledge of the matter. Blackstone has led a wave of investment into urban warehouses, betting that demand from online retailers such as Inc. will continue to push up rents and values.

Any sale or public offering of the new company is probably several years away, the people said, asking not to be identified as the plan is private. The last-mile logistics facilities, so called because of their proximity to population centers, are currently overseen by M7 Real Estate in a venture with Blackstone, they said.

A spokesman for Blackstone declined to comment.

Earlier this month, Blackstone agreed to buy $18.7 billion of U.S. urban warehouses from Singapore’s GLP Pte. In both the U.S. and Europe, online retailers that began by building up huge regional distribution centers near major transport arteries are shifting their focus to local hubs in a bid to reduce delivery times.

The relative scarcity of urban warehouses has also attracted investors including Cerberus Capital Management LP, which has established a 750 million-euro ($849 million) portfolio in Spain. The appeal of existing facilities is enhanced by the fierce competition for land in many major cities, where politicians are under pressure to release more industrial land for housing developments.

The plan for a last-mile warehouse unit in Europe echoes the strategy the private equity firm pursued with Logicor, which it sold to China’s sovereign wealth fund for about 12 billion euros in 2017. Logicor was set up by Blackstone in 2012 to buy, develop and manage larger warehouses across Europe and proved to be one of the firm’s most successful real estate bets of recent years, anticipating the shift in investors’ allocations toward industrial property and away from retail as sales migrated to the internet.

Large holdings of smaller warehouses have historically proved challenging to assemble due to the intensive management required and the fact that many such properties across Europe are owned by small private investors. Blackstone accelerated its move into the sector with a 1.3 billion-euro deal for the continental European assets of Hansteen Holdings Plc in 2017 and has worked closely with M7 to scour the continent for opportunities, the people said.

M7 and Blackstone may pursue further deals together in future, the people said.

To contact the reporter on this story: Jack Sidders in London at [email protected] To contact the editors responsible for this story: Shelley Robinson at [email protected] Patrick Henry, Marion Dakers


© 2019 Bloomberg L.P

TAGS: Industrial
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