GIC beefs up real-estate portfolio with US$8.1b purchase of IndCor

Singapore

SINGAPORE sovereign wealth fund GIC has confirmed news that its affiliates will buy US industrial property company IndCor Properties Inc from Blackstone Group LP for US$8.1 billion, making it yet another major real-estate investment for the fund. (see infographic)

A GIC spokesman confirmed the purchase on Tuesday, following Blackstone's announcement of the deal.

The move gives GIC and its affiliates a significant presence in the US warehousing space, thanks to Chicago-based IndCor's ownership of some 117 million square feet of industrial real estate throughout the country.

The deal also puts paid to IndCor's plans for an initial public offering. Blackstone had been intending to exit IndCor through a share offering that would have valued IndCor at about US$8 billion, but clearly found the sale to GIC - a more immediate realisation of its investment - the more attractive alternative.

The investment by GIC and its affiliates comes at a time when demand for commercial real estate, and prices for such real estate, in major markets is rising. Warehouse properties and logistics-services companies are fetching increased interest from funds as global trade grows. Brookfield Property Partners LP and TPG Capital have been on the acquisition path for such assets too.

Blackstone formed IndCor in 2010, acquiring property when values crashed after the global financial crisis. IndCor now has the largest portfolio of wholly owned warehouses and distribution centres in the US, operating in 29 key markets in 23 states.

"We built IndCor through 18 acquisitions to be one of the largest industrial real estate companies in the United States," said IndCor CEO Tim Beaudin in Blackstone's statement. "We are excited about the company's future prospects under new long-term ownership with GIC."

GIC declined to comment further on the deal, which is expected to close in the first quarter of next year.

The sovereign wealth fund has been very active recently in beefing up its global real-estate portfolio, which accounted for 7 per cent of its assets in its most recent annual report.

Just last month, it announced two investments in New Zealand. In the first, it partnered with the country's Goodman Property Trust to co-invest in Auckland's Viaduct Quarter; and, in the second, it agreed to buy a 49 per cent stake in five malls in the country from Scentre Group in a transaction valued at NZ$1.04 billion (S$1.07 billion).

In October, it announced that it bought the entire office component of Pacific Century Place Marunouchi - situated next to Tokyo Station - with a gross floor area of 38,840 sqm of net lettable area, for US$1.7 billion. It also acquired the remaining half of the RomaEst Shopping Centre in Italy, to gain full ownership of the mall, for an undisclosed amount; and it agreed to pay more than 200 million euros (S$325 million) for a 30 per cent stake in Spanish real estate firm Gmp.

The month before, it agreed with Indian developer Brigade Enterprises to jointly invest 15 billion rupees (S$317 million) in residential real estate projects in south India.

In January, it teamed up with New York-based developer Related Cos and the Abu Dhabi Investment Authority to buy Time Warner Inc's headquarters in Manhattan for US$1.3 billion. And, the month before that, it acquired Blackstone's 50 per cent stake in London's Broadgate office complex for a reported £1.7 billion (S$3.5 billion).

Meanwhile, Blackstone has been stepping up its real-estate sales, as it prepares to raise its next global property fund. The private-equity giant has been reducing its stakes in its publicly listed entities, Brixmor Property Group Inc - the second-largest US shopping centre landlord - hotel group Hilton Worldwide Holdings Inc, and lodging company Extended Stay America Inc.

Blackstone has said it plans to raise at least as much as US$13.3 billion - the amount raised in its last fund - for its next fund.