Blackstone Selling Six Japan Warehouses to GIC for $800M

Blackstone on Friday announced the sale of a portfolio of six warehouses in Japan to Singapore sovereign fund GIC for more than $800 million, as the private equity giant continues to shed assets after reporting a steep decline in real estate earnings for the year’s first quarter.

The deal comprises 4 million square feet (371,612 square metres) of warehouses and represents one of the largest logistics portfolio transactions ever reported in Japan, Blackstone said in a release. The six modern warehouses, developed by Japan’s Daiwa House Industry, have an average age of five years and a weighted average occupancy of 99 percent, GIC said in a separate statement.

Daisuke Kitta, Blackstone’s head of real estate for Japan, said the transaction reflected how the Manhattan-based firm keeps delivering for investors in any environment by focusing on the right sectors.

“Logistics is one of Blackstone’s highest conviction investment themes, making up more than 40 percent of our global real estate portfolio,” Kitta said. “We were one of the earlier investors and have since built world-class platforms, driven by our confidence in the sector’s continued growth.”

Daiwa House Cash-Out

The parties provided no specific details about the six warehouses, saying only that the Daiwa House facilities are spread across Japan in regional logistics hubs with convenient transport access via major roads and expressways.

Nikkei Asia reported in July 2020 that Blackstone was acquiring four logistics facilities in Japan from Daiwa House for JPY 55 billion ($523 million). The media outlet said the properties were located in the Kanto region, which includes Tokyo, and the central Chubu region, with Blackstone “expected to own the properties over the long term” as Daiwa House continued to operate them.

Though smaller in scale, the transaction announced this week carries echoes of past mega-deals, including Blackstone’s sale of its Milestone logistics portfolio to a GIC-ESR joint venture for $2.9 billion and its disposal of the Logicor platform to China’s CIC for $13.8 billion in Europe’s single largest real estate deal ever.

The US investment titan said last week that earnings from its real estate business fell 58 percent year-on-year in the first quarter, as a market slowdown reduced the group’s income from asset sales and disposals by more than half compared with 2022 levels.

The first three months of 2023 saw Blackstone’s real estate team in a heightened sell mode, with funds managed by the group offloading the St Katharine Docks complex in central London to Singapore-based City Developments Ltd for $468.2 million. The firm has also wrestled with surging requests for withdrawals from the high-profile Blackstone Real Estate Income Trust.

Stocking Up on Sheds

For GIC, which dominated Asia Pacific’s outbound real estate investment in the first quarter, the latest acquisition represents an opportunity to further expand its exposure to logistics assets.

“This portfolio provides stable and diversified income streams with attractive growth potential, which is well-aligned with GIC’s long-term investment horizon and approach,” said Goh Chin Kiong, deputy chief investment officer for real estate at the $690 billion sovereign fund. “It is a good addition to our Japan portfolio as we continue to focus in tailwind sectors such as hospitality and logistics.”

GIC closed two blockbuster deals during the first three months of the year: teaming with Oak Street to acquire US-based Store Capital commercial and industrial trust for $14 billion in cash and working with Toronto-listed Dream Industrial REIT to buy out Canada’s Summit Industrial Income REIT in a deal valued at $4.4 billion.