Private equity giant Blackstone, through its credit and insurance arm, plans to invest $475 million to fund the construction of a highly automated grocery distribution center in Burlington, North Carolina, for Ahold Delhaize.
The deal structure gives Blackstone ownership of the facility while funding 100% of construction costs, the company said in a statement. Ahold Delhaize would lease the facility on a triple-net deal once work is completed, with an option to purchase the site.
"This investment reflects our focus on partnering with leading investment grade corporations globally by providing flexible, low-cost capital through our credit and insurance platform," Christopher Yonan, head of European Infrastructure at Blackstone Credit & Insurance, said in a statement.
Netherlands-based Ahold Delhaize operates five grocery brands, including Food Lion, Giant Co., Giant Food, Hannaford and Stop & Shop. The companies serve 26 million customers weekly and form the largest grocery retail group on the East Coast.
The distribution center represents a $860 million project investment in Guilford County. Ahold Delhaize first announced plans for the Food Lion facility in October.
The transaction demonstrates institutional investor appetite for sale-leasebacks in industrial real estate. Private equity and institutional investors have accounted for an average annual volume of about $2 billion of industrial sale-leaseback deals out of an average $5.3 billion in total deals per year, according to CoStar data.
The triple-net lease arrangement allows Ahold Delhaize to preserve capital while securing critical infrastructure, reducing refinancing risk on a project of this scale. In a triple-net deal, the tenant pays for building costs, including taxes, insurance and maintenance.
The facility is slated to add more than 1 million square feet of distribution space to serve Food Lion stores across the region. Construction is scheduled to begin this quarter, with operations starting in 2029. The specific site has not yet been identified.
For the record
JPMorgan Chase served as the exclusive financial adviser to Ahold Delhaize. A&O Shearman provided legal counsel to Ahold Delhaize. Milbank acted as legal counsel to Blackstone Credit & Insurance.