Tuesday, December 22, 2020

"Why Blackstone and other private equity giants are gobbling up warehouses"

From PitchBook, December 7:

Private equity gets lots of attention for gobbling up assets of all types, from fast-food chains to red-hot tech companies.

Less fanfare perhaps has followed the industry's growing hunger for, of all things, warehouses and other industrial real estate.

With ecommerce sales booming, private equity firms have been on something of a buying binge, snatching up tens of millions of square feet of warehouse space, in part as an additional way to capitalize on an ongoing revolution in digital commerce and logistics.

At the center of the push is Blackstone, a private equity titan that has broadened its investment strategies well beyond the leveraged buyouts that have been the firm's calling card.

In the firm's latest warehousing conquest, Blackstone unveiled its purchase last week of 13 industrial warehouses from Iron Mountain, a Boston-based provider of storage services, for $358 million. Spanning 2.1 million square feet, the portfolio includes properties in California, New Jersey and Pennsylvania's Lehigh Valley, a once-booming steel region that has pushed hard into the logistics boom. Iron Mountain will continue to use the facilities and enter a 10-year lease that includes an option to extend another 20 years.

KKR is also making waves in industrial real estate. The firm is close to making a deal worth more than $800 million to acquire a portfolio of warehouses in Atlanta, Baltimore, Chicago and Dallas. KKR would finance the transaction with $700 million in debt, according to Bloomberg, which first reported the deal talks....


It's always nice to see a sector you've been babbling about for a couple years finally referred to as a bubble....