Blackstone Targets Germany Growth With Warehouse Acquisition

Blackstone Group LP is in talks to buy its first logistics property in Germany as part of a plan to double the company’s European warehouse holdings over the next two years.

Blackstone, the world’s biggest manager of alternative assets such as private equity and property, expects to make a purchase as early as this year and then add further assets in Europe’s biggest economy, Jonathan Lurie, the managing director who oversees Blackstone’s European logistics portfolio, said in an interview.

“Logistics has been a critical part of Blackstone’s business, and Germany, as the economic engine of Europe, will play a large role,” Lurie said. “We feel very confident about the chances of building a sizable business there.”

Blackstone owns about 30 million square feet (2.8 million square meters) of warehouses and distribution centers through its London-based LogiCor unit, founded in 2012. LogiCor Chief Executive Officer Mo Barzegar said in April that the company plans to double its portfolio to profit from rising rents and values. LogiCor had 26 million square feet of space at the time.

Most of LogiCor’s holdings are in the U.K., France and Poland, and the company has recently made acquisitions in the Netherlands and Spain. LogiCor is also seeking opportunities in northern Italy, Lurie said.

Increased Investment

Investment in European logistics assets rose to 6 billion euros ($8 billion) in the first half, the highest since 2007, according to data compiled by Jones Lang LaSalle Inc. Demand for German warehouses and distribution centers helped reduce European logistics yields by 10 basis points in the first half, the Chicago-based broker said.

TPG Capital and the real estate arm of Quebec’s state pension fund today announced the acquisition of a European warehouse landlord from Bahrain’s Arcapita Bank BSC.

LogiCor has been slow to enter Germany because prices are higher than in other European countries, Lurie said.

“Germany has not been as stressed as the other markets in terms of occupancy or development, so it’s been a harder market to enter,” Lurie said.

Blackstone is interested in buying assets near transportation hubs and it’s examining deals in Munich, Stuttgart, Frankfurt, Hamburg and the Ruhr region, he said.

In April, LogiCor’s Barzegar said the company may buy properties in Germany, Spain, Italy, Belgium, the Netherlands and Luxembourg. New York-based Blackstone plans to raise 5 billion euros for its fourth European real estate fund, a person with knowledge of the process said in September.

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