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Business deals

GLP reduces US footprint with $18bn warehouse sale to Blackstone

Under new Chinese owners, Singapore-based logistics giant shifts focus to Asia and Europe

An Amazon fulfillment center in Baltimore, Maryland. E-commerce has given logistics real estate a boom in recent years.   © Reuters

NEW YORK -- GLP, Asia's largest warehouse property owner, has reached a deal to sell its U.S. warehouses, including those used by Amazon, to Wall Street firm Blackstone for $18.7 billion, including debt.

With the move, the Singapore-based company -- which was bought out by a Chinese consortium in 2018 -- would reduce its footprint in the U.S. as it builds up new investment funds in Asia and Europe.

Blackstone, meanwhile, would become one of the largest owners of U.S. logistical properties. 

The sale -- which Blackstone describes as the largest-ever private real estate transaction in the world -- covers 1,300 properties over a span of 179 million square feet, with Amazon and Walmart as major tenants. Blackstone and GLP announced the deal on Sunday.

GLP had reportedly been eyeing an initial public offering for its American warehouses which would have valued the company's U.S.-based operations at $20 billion. 

The direct sale to Blackstone, however, will relieve pressure from the debt incurred when GLP was taken private by a consortium of Chinese investors including private equity firm Hillhouse Capital Group and real estate behemoth Vanke Group. The company delisted from the Singapore Stock Exchange in January 2018.

GLP, the largest owner of warehouse real estate in China, Japan and India, entered the U.S. market in 2015 when it completed its purchase of a majority stake in IndCor Properties from Blackstone for $8.1 billion. Within a year, GLP had expanded its portfolio to become America's second-largest owner of logistics property.

A GLP facility in Phoenix, Arizona. (Photo courtesy of GLP)

GLP said it will reinvest in the U.S. market even as it is now divesting the bulk of its portfolio in the country.

"We are looking forward to expanding our footprint in the United States to continue to seize key opportunities in the U.S. market," Alan Yang, chief investment officer of GLP, said in a statement.

In recent months, however, GLP made more moves in Asia, announcing multiple new funds in the region in 2018, including three China funds totaling over $5 billion and the $5.6 billion Japan Development Fund. GLP also entered the Indian market in September when it formed a partnership with India's largest industrial real estate company, IndoSpace. In December, the Indian joint venture closed out the country's largest logistics real estate fund at $1.2 billion. 

GLP owned property worth $37 billion in China, Japan and India, as of end of March, accounting for more than half of its global portfolio.

It also entered the European market when it bought out the region's leading warehouse operator Gazeley for $2.8 billion in 2017. GLP announced in August the closing of two funds totaling $4 billion for investments in Europe.

Logistics property is undergoing a quiet boom in recent years thanks to the proliferation of e-commerce. Ken Caplan, global co-head of Blackstone Real Estate, said the logistics sector is the company's "highest conviction global investment theme today" and that Blackstone will continue to build on its existing portfolio to "meet the growing e-commerce demand."

Global investments in the logistics property sector totaled $153.6 billion in 2018, a 5.3% increase on the year, U.S.-based real estate services group CBRE said, citing Real Capital Analytics data.

In the Asia Pacific region, there has been a "shortage of institutional-grade logistics product," which offers "significant investment opportunities in the region," CBRE said.

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