"Blackstone buys Gramercy in another mega deal for warehouse properties" by Sarah Mulholland and Sarah Syed Bloomberg News May 07, 2018
NEW YORK — Blackstone Group is doubling down on industrial real estate by buying Gramercy Property Trust, the second multibillion-dollar takeover of a warehouse company in as many weeks, with the growth of e-commerce increasing the demand for such property.
The shift toward online shopping has increased the need for warehouse space as retailers seek to expand their digital operations and cut delivery times. That has lured investors into logistics real estate at a time when sales of other types of commercial property have slowed amid concern over rising interest rates and a pullback in foreign investment.
Last week, Prologis Inc., the world’s largest warehouse owner, agreed to acquire DCT Industrial Trust Inc. for $8.4 billion in stock and assumed debt. Shopping at Amazon.com and other Internet retailers still accounts for less than 10 percent of retail sales in the United States, but e-commerce is reconfiguring supply chains.
The stock market has been punishing for all types of real estate investment trusts, pricing their holdings well below private market valuations. Investors such as Blackstone are in a good position to snap up assets at a discount, said Lindsay Dutch, an analyst at Bloomberg Intelligence. Warehouses in places like New Jersey and Southern California are especially prized for their proximity to high-population areas, she said.
Industrial REITs remain one of the few real estate asset classes experiencing “true market rent growth,” driven by fundamentals such as expansion in the economy, population, and e-commerce, SunTrust Robinson Humphrey analysts led by Ki Bin Kim said in a note to clients Monday.
Blackstone, the world’s biggest private equity owner of real estate, has stepped up its purchases in recent months. In March, the New York firm added 22 million square feet when it bought the Canyon Industrial portfolio for about $1.8 billion. That followed a January agreement to acquire Canada’s Pure Industrial Real Estate Trust in a $1.9 billion deal.
Blackstone has now acquired more than 580 million square feet of industrial space since 2010 and continues to manage over 450 million square feet, according to a person with knowledge of the matter.....