Blackstone Wraps Up $1B Purchase of ProLogis Industrial Assets

The group of 182 premier assets, leased to more than 500 tenants, spans 28 key markets across a total of 19 states.

November 22, 2010
By Barbra Murray, Contributing Editor

Courtesy Flickr Creative Commons user Bohman

It’s a big deal and it’s a done deal. Acting through affiliates, Blackstone Real Estate Advisors has enhanced its portfolio by 23.2 million square feet of industrial space in North America with the closing of an approximately $1 billion purchase from distribution facilities REIT ProLogis.

The group of 182 premier assets, leased to more than 500 tenants, spans 28 key markets across a total of 19 states. ProLogis pocketed cash proceeds of $804 million, which the company plans to use for the repayment of debt, as well as for development endeavors. The REIT also walked away with $190 million of funding of a preferred equity interest in the Blackstone affiliate associated with the portfolio disposition.

Blackstone relied on a $514 million syndicated five-year senior secured term loan from Wells Fargo & Co. to finance part of the acquisition of the ProLogis properties. Wells Fargo has been quite a friend to the commercial real estate industry, including the industrial property sector, during the economic downturn. The bank topped the list of lending institutions originating the most loans involving U.S. industrial real estate in 2009, as per the Mortgage Bankers Association’s Commercial Real Estate/Multifamily Finance Firms Annual Origination report.

It has been a busy year for Blackstone. Last month alone, the company received news of the U.S. Bankruptcy Court’s approval of General Growth Properties Inc.’s reorganization plan, which involves $6.8 billion in equity commitments from a group that includes Blackstone, and in conjunction with another investment group, the company acquired Extended Stay Inc. in a $3.9 billion deal as part of the bankrupt hotel company’s reorganization plan.

And Blackstone’s business with ProLogis for the year is not done yet. The company is on schedule to close on the acquisition of interests in three of ProLogis’ North American property funds sometime in December.