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Blackstone REIT Expands 'Last-Mile' Warehouse Holdings with $1.8 Billion Portfolio Purchase

22 Million-SF Canyon Industrial Portfolio Includes Amazon, DHL, FedEx and Coca-Cola Among 377 Tenants
March 12, 2018
Blackstone Real Estate Income Trust, Inc. (BREIT) announced it has successfully closed on a $1.8 billion transaction to acquire a 22 million-square-foot portfolio consisting of 146 infill warehouse and distribution properties across the country.

Known as the Canyon Industrial Portfolio, the properties were sold by a pair of funds sponsored by Boston-based Cabot Properties: Cabot Industrial Value Fund IV, L.P. and Cabot Industrial Value Fund IV Manager, LP. Blackstone had previously put the portfolio under contract in late December.

The acquired properties consists of 146 "last-mile" buildings, with the largest concentration in Chicago at 4 million square feet accounting for 18% of the portfolio's aggregate base rent; followed by Dallas (3.22 million SF, 12%), Baltimore and Washington D.C. (1.86 million SF, 12%), Los Angeles and Inland Empire, CA (1.12 million SF, 7%), South-Central Florida (1.12 million SF, 7%) and Denver (1.07 million SF, 6%).

The portfolio's 377 tenants include Amazon, Federal Express, DHL, Coca-Cola, Fiat Chrysler and the U.S. government, according to a securities filing.

BREIT noted that the industrial vacancy rates across the portfolio’s markets has continued to decline over the past seven years and is currently just 4.6%, while rents have increased 5.7% year-over-year.

"The continued market rent growth in the portfolio’s markets resulted in rents on new leases exceeding rents on expiring leases by 9% in the portfolio during the third quarter of 2017," Blackstone said, adding that the portfolio has some leasing upside as it's currently 90% occupied.

"BREIT’s portfolio, with its emphasis on stable, income-producing warehouse and apartment assets, is well positioned to benefit from continued tailwinds in these sectors," said A.J. Agarwal, Blackstone REIT president and head of U.S. core-plus real estate for the private-equity giant.

The Blackstone-sponsored non-traded REIT invests in stabilized U.S. commercial real estate properties, including multifamily, industrial, retail and hotel assets.

BREIT’s portfolio now totals $7 billion over 272 properties, including 33 million square feet of industrial space and 17,200 multifamily apartments, with some select-service hotels and grocery-anchored shopping centers.

Blackstone has re-entered the U.S. industrial market in a big way since last year, when it acquired a 38-property portfolio totaling 4.4 million square feet in Southern California from Principle Real Estate Investors for about $500 million.

In January, the private-equity company agreed to buy Canada-based Pure Industrial Real Estate Trust, which owns and operates industrial properties across North America, in an all-cash deal valued at about $2 billion.

Please refer to CoStar Comp #4168862 for additional details on the Canyon Industrial Portfolio sale.


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