Colony Capital (NYSE: CLNY) and Blackstone Real Estate Partners, which is a subsidiary of Blackstone (NYSE: BX), have signed an agreement that will see Blackstone acquire Colony Industrial for a cumulative buying price of $5.9 billion. Colony Industrial is Colony Capital’s subsidiary operating base and deals with real estate assets.
According to a press release dated September 30, a more significant chunk of the total transaction comes from Colony Industrial’s last-mile light industrial assets, which consists of logistics assets in 465 light industrial buildings spread across 26 U.S. markets covering almost 60 million square feet. The assets are mainly concentrated in Florida, Dallas, Atlanta, North Carolina, and New Jersey.
The transaction also comprises a 51% ownership interest from Colony that comes from its 4 million square foot portfolio of bulk distribution assets. Colony Capital is also the subsidiary operating base that manages the assets of both portfolios. Everything combined, Colony expects to reap more than $1.2 billion in net sales.
Speaking about the deal, Colony Capital President Darren Tangen said:
“We appreciate Blackstone has recognized the value that we’ve created at Colony Industrial and they are the ideal steward to lead this business during the next phase of its growth. [….] This sale allows Colony to both achieve compelling returns for our investors and generate significant liquidity, which among other uses, will help accelerate our ongoing transition into digital real estate and infrastructure.”
Expansion of Last-mile Footprint
By acquiring the logistics assets, Blackstone seeks to expand the last-mile light industrial initiative established by Colony Industrial five years ago. Lauding the deal, Blackstone Head of Real Estate Americas Nadeem Meghji said acquiring the high-quality warehouses show their ongoing conviction in efficient logistics and positive e-commerce trends.
He emphasized that as retailers continue to reduce their delivery times and increase their last-mile footsteps, the warehouses in densely populated areas will continue to experience a massive demand growth.
On his part, Managing Director and Head of Colony Industrial Lew Friedland said that the last-mile logistics real estate is an essential component of the global supply chain. He stated that the strategy had generated strong returns for their investors “and the portfolio and platform are extremely well-positioned for the positive market environment and continued growing demand for last-mile logistics space.”
Overall, each part of the deal is subject to standard closing conditions such as third consent. The two parties expect to close the deal in the fourth quarter of this year (2019).