Blackstone adds warehouses, boosting industrial bet

New York

BLACKSTONE Group Inc is acquiring a majority stake in dozens of warehouses, boosting its bet on industrial properties as investors increasingly target a corner of commercial real estate that has fared well in the pandemic.

The firm's non-traded real estate investment trust, BREIT, is taking a 60 per cent stake in 71 warehouses owned by LBA Logistics with a gross value of US$1.6 billion, according to a statement on Friday.

The properties, mostly in California and Seattle, are primarily in "last mile" locations close to consumers, Blackstone said. The rise of online shopping, which has accelerated during the pandemic, has fuelled investor interest in warehouse and logistics properties. That's driven up prices, even as other commercial real estate sectors have struggled.

Blackstone spent billions of dollars before the pandemic in a long-term bet on warehouses. The asset manager has focused its acquisitions on heavily populated areas where it's tougher to build, said Nadeem Meghji, Blackstone's head of real estate in the Americas. "It's difficult to accumulate scale in these dense, West Coast geographies," he said. "That's what makes this opportunity so unique."

Industrial properties made up about 35 per cent of BREIT's portfolio at the end of 2020, Blackstone said in a letter to investors last week. That helped propel a 6.1 per cent return for the vehicle last year, compared with a 5.5 per cent fall for a Bloomberg index of US Reit stocks. BLOOMBERG