Blackstone Group LP (BX) is planning to take its industrial-property unit public this year to raise about $1 billion, said a person with knowledge of the proposed transaction.
The initial public offering would value IndCor Properties Inc. at about $8 billion, said the person, who asked not to be identified because the information is private. That would make IndCor the largest “pure-play” U.S. industrial real estate investment trust, said Eric Frankel, an analyst at property research firm Green Street Advisors Inc.
Blackstone has been taking public some of its largest real estate holdings as stocks hover close to highs. Transactions include last year’s IPOs of Hilton Worldwide Holdings Inc. and shopping-center owner Brixmor Property Group Inc. (BRX)
The near-term outlook for IndCor “should be pretty strong in terms of fundamentals, and I’m sure that will reflect well” on the offering’s reception by investors, Frankel, whose firm is based in Newport Beach, California, said in a phone interview. The prospect of Blackstone looking to sell a large stake over time “may weigh on the stock for a short period.”
Blackstone formed IndCor in 2010 by taking advantage of the financial crisis to acquire assets. Chicago-based IndCor holds more than 100 million square feet (9.3 million square meters), about the same as Duke Realty Corp. (DRE), the largest REIT focused on U.S. industrial properties. Duke, which also owns office properties, has a market value of $6.1 billion.
The existing pure-play U.S. industrial REITs, DCT Industrial Trust Inc. and First Industrial Realty Trust Inc. (FR), together may roughly equal IndCor in asset value, Frankel said.
Christine Anderson, a spokeswoman for New York-based Blackstone, declined to comment on the IndCor plan, which was reported earlier today by the Wall Street Journal.
Industrial REITs reported second-quarter earnings that were mostly positive, according to Frankel, citing EastGroup Properties Inc. (EGP), Prologis Inc. and Liberty Property Trust.
“Demand is solid across all size ranges,” Frankel wrote in a July 23 report. “As market occupancy rates trend up, REITs are gaining pricing power.”
Industrial landlords have been laggards within the Bloomberg REIT Index in the past year, after outperforming most other property types the previous year. The Bloomberg Industrial/Warehouse Index returned 9.2 percent in the past 12 months with dividends reinvested, while hotel REITs gained 25 percent, apartments 19 percent, offices 15 percent and regional malls 13 percent. The broader REIT index also had a 13 percent return.
Blackstone is working with units of Citigroup Inc. (C), Barclays Plc, Royal Bank of Canada and Wells Fargo & Co. on the IndCor offering, according to the Wall Street Journal.
Robert Julavits, a spokesman for Citigroup; Mark Lane, a Barclays spokesman; and Jessica Ong of Wells Fargo all declined to comment, as did Elisa Barsotti, a spokeswoman for RBC.
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