Blackstone Bets $7.6 Billion More on the Amazon Revolution

Blackstone Bets $7.6 Billion More on the Amazon Revolution

Blackstone Group LP is doubling down on industrial actual property by shopping for Gramercy Property Trust, the second multibillion-dollar takeover of a warehouse firm in as many weeks with the progress in e-commerce elevating demand.

Affiliates of Blackstone Real Estate Partners VIII agreed to pay $27.50 in money for every Gramercy share in a transaction valued at $7.6 billion, in keeping with a statement Monday. The per-share value is a 15 % premium to Friday’s shut. Gramercy, based mostly in New York, has about $2.eight billion in debt, in keeping with knowledge compiled by Bloomberg. The firm’s shares jumped to $27.51 at 11:17 a.m. in New York.

The shift towards on-line purchasing has elevated the want for warehouse area by retailers in search of to broaden their digital operations and minimize supply occasions. That’s lured buyers into logistics actual property at a time when gross sales of different commercial-property varieties have slowed amid concern over rising rates of interest and a pullback in international funding. Purchases of business buildings surged 34 % in the first quarter from a 12 months earlier to $20.9 billion, in keeping with analysis agency Real Capital Analytics Inc.

Last week, Prologis Inc., the world’s largest warehouse proprietor, agreed to acquire DCT Industrial Trust Inc. for $eight.four billion in inventory and assumed debt. Shopping at Amazon.com Inc. and different web retailers nonetheless accounts for lower than 10 % of retail gross sales in the U.S., however e-commerce is reconfiguring provide chains.

“The quickest way to get access to more warehouses is to buy companies that own them rather than going through the development process,” stated Lindsay Dutch, an analyst at Bloomberg Intelligence. The Gramercy deal “is another demonstration of how strong demand is.”

Discounted Assets

The inventory market has been punishing for all sorts of actual property funding trusts, pricing their holdings nicely under non-public market valuations. Investors corresponding to Blackstone are in a superb place to snap up property at a reduction, Dutch stated. Warehouses in locations like New Jersey and Southern California are particularly prized for his or her proximity to high-population areas, she stated.

Industrial REITs stay certainly one of the few actual property asset courses that’s experiencing “true market rent growth,” pushed by fundamentals corresponding to enlargement in the financial system, inhabitants and e-commerce, SolarTrust Robinson Humphrey analysts led by Ki Bin Kim stated in a notice to purchasers Monday.

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