Blackstone to Acquire Colony Capital’s Industrial Arm for $6B

The centerpiece of the deal is a 60 million-square-foot logistics portfolio spread across 26 U.S. metros.
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In its latest blockbuster move to expand  its industrial footprint, Blackstone Group has entered into an agreement to buy Colony Capital’s light industrial division for $5.9 billion. 

At the center of the deal is Colony Industrial’s 60 million-square-foot  logistics portfolio, which will be acquired by Blackstone Real Estate Partners IX, the investment giants said on Monday.  The portfolio comprises 465 last-mile properties in 26 markets across the U.S., with the majority of assets in Dallas, Atlanta, Florida, Northern New Jersey and California.

Also included in the deal is Colony Industrial’s 51 percent ownership in a 4 million-square-foot bulk industrial portfolio and its operating platform, which manages both portfolios included in the transaction. As of June 30, Colony Industrial had at least 1 million square feet of assets in 20 different markets and at least 5 million square feet of holdings in Atlanta, Dallas and Chicago, according to Colony Capital’s second-quarter 2019 report. 

The announcement comes on the heels of several other Blackstone blockbusters. On Sept. 26, Blackstone announced that it had completed an $18.7 billion deal with Global Logistics Properties that was announced in June. That deal adds 179 million square feet to Blackstone’s industrial holdings in the U.S., nearly doubling them. It set a record for the largest-ever private-equity transaction in commercial real estate.

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Blackstone will also be the beneficiary of Colony Industrial’s active acquisition strategy. In 2018 alone, the firm acquired 5.3 million square feet in Atlanta, San Antonio, Jacksonville, Fla., San Leandro, Calif., Las Vegas, northern New Jersey and Baltimore. 

And Blackstone is investing significant capital in industrial assets outside the U.S., as well. Earlier this month, Blackstone said that it had struck a $4.7 billion deal to buy Dream Global, a Toronto-based REIT with logistics and office holdings located primarily in Germany and the Netherlands. Like the Colony Industrial transaction, the Dream Global acquisition is scheduled to close during the fourth quarter.

For Colony Capital, the sale of the industrial unit is the latest milestone in an eventful year. In July, after Colony acquired Digital Bridge Holdings for $325 million, Colony CEO Tom Barrack announced he would be stepping down from his role, with Digital Bridge’s co-founder and CEO Marc Ganzi to succeed him by 2021.

Colony was represented in the deal by CBRE National Partners. Colony is expecting aggregate net sales proceeds from the transaction to surpass $1.2 billion. Darren Tangen, president of Colony Capital, said in a press release announcing the deal that the sale proceeds will help further their transition into digital real estate and infrastructure.

Blackstone’s Head of Real Estate Americas, Nadeem Meghji, said in prepared remarks that the company is bullish on the logistics and e-commerce market and expect last-mile facilities in dense population areas to continue to grow in demand.