Blackstone Group LP agreed to buy 69 warehouses valued at about $800 million from Australia’s Dexus Property Group, expanding its bet on a U.S. economic recovery, according to a person with knowledge of the deal.
The properties have a total of 16 million square feet (1.5 million square meters) and are located throughout the U.S.’s southern, mid-Atlantic and Midwest regions, said the person, who asked not to be named because the information is private. Blackstone owns more than 45 million square feet of industrial real estate through a Chicago-based company called IndCor Properties Inc.
Dexus is in exclusive talks with an undisclosed buyer for the sale of the properties, and a transaction is conditional on satisfactory due diligence and approval by its board, the Sydney-based company said in a statement to the Australian stock exchange yesterday. Peter Rose, a spokesman for New York-based Blackstone, declined to comment. Dexus spokesman Ben Leeson declined to comment beyond the company’s statement.
U.S. warehouse owners have seen a net gain in occupied space for six quarters as the economy begins to pick up, according to a March 22 report from Green Street Advisors Inc., a property research firm in Newport Beach, California. While “industrial fundamentals are slowly recovering,” an increase in rents “remains elusive,” John Stewart, a senior analyst at Green Street, said in the report.
Dexus shares rose 2.3 percent to 90.5 Australian cents at the close in Sydney, the highest since Feb. 24. The shares have gained 9 percent so far this year, compared with a 6.5 percent increase in the benchmark S&P/ASX 200 index. The Blackstone transaction was reported yesterday by Real Estate Alert.
West Coast Focus
Dexus, which is focusing its U.S. operations on the nation’s west coast, paused disposals in other parts of the country last year as it sought to boost occupancies to achieve better sale prices. It said on Feb. 15 that it would resume its U.S. sales and seek to dispose of its European industrial properties within 18 months.
The company, Australia’s biggest owner and manager of office properties, appointed an agent earlier this year to seek a buyer for all its U.S. industrial properties outside the west coast, it said yesterday.
Dexus valued its industrial assets at A$1.7 billion as of Dec. 31, with the U.S. properties accounting for $1.3 billion. Warehouses in the center and east coast of the U.S. made up 49 percent of those, it said in its annual review in September.
Blackstone Real Estate
Blackstone and other big private equity managers have sought to diversify their businesses after the 2008 financial crisis eroded investor appetite for traditional buyouts. Blackstone’s real estate unit oversaw $31.2 billion of fee-earning assets as of Dec. 31, up 16 percent from a year earlier and 32 percent from the end of 2009. Profit from the division jumped 56 percent to $1 billion in 2011 from a year earlier.
The firm raised more than $10 billion in less than a year for its next real estate fund and is seeking $2 billion more this year, a person familiar with the plans said in February. The new fund would be the biggest private equity real estate pool ever.
Blackstone in June acquired the U.S. malls of Melbourne-based Centro Properties Group, now restructured and renamed Centro Retail Australia, for about $9.4 billion, the firm’s biggest deal since the leveraged buyout boom collapsed in 2007.