Blackstone Buys Out GIC’s Half of $2.5B Dexus Aussie Logistics JV

Just months after selling Australia’s biggest logistics portfolio of the year, Blackstone is stocking up on more warehouses Down Under with the acquisition of a nearly half share in a joint venture holding 77 properties in the country’s major cities.

Blackstone has agreed to acquire a 49 percent stake in the Dexus Australia Logistics Trust from Singapore sovereign wealth fund GIC, the company said today, with the private vehicle reported to be worth A$3.5 billion ($2.5 billion).

“We are pleased to both acquire a portfolio of best-in-class logistics assets in Australia and partner with Dexus,” said Frank Cohen, global head of core-plus real estate for Blackstone. “The transaction significantly increases our Asian Core-Plus Real Estate exposure to the logistics space and is consistent with our strategy of overweighting high conviction sectors and locations.”

The New York-based fund management giant, which just two days ago announced the $540 million acquisition of a stake in a Guangzhou logistics park, has made assembling, operating and selling warehouse portfolios one of its core activities in recent years, as the growth of e-commerce and globalisation of supply chains drive demand for modern distribution facilities.

Trading Stakes With GIC

Accounts in the Australian media indicate that Blackstone is paying the equivalent of $1.2 billion for GIC’s share of the logistics vehicle, with neither party having released financial details of the transaction. The purchase would allow Stephen Schwarzman’s shed-loving firm to reinvest a chunk of the $2.9 billion that it took in during April selling its Milestone Logistics portfolio in Australia to a joint venture between GIC and industrial specialist ESR.

In a statement to the Australian stock exchange, Dexus said that 90 percent of the portfolio is connected to the Sydney and Melbourne markets, which have been the strongest performing this year, with the assets primarily composed of traditional logistics facilities that are set to benefit from the growth of e-commerce.

“We are pleased to have worked with GIC to grow this high-quality portfolio,” said Dexus chief executive Darren Steinberg. “This new relationship provides a stable long-term source of capital to invest alongside us.”

Just over one month ago, Blackstone had displaced another sovereign fund in buying a half-stake in the Grosvenor Place office tower in Sydney from a pair of Dexus-managed vehicles. The US titan had pounced on the central Sydney commercial asset after China’s CIC had backed out of an earlier agreement to boost its existing 25 percent stake in the property, where Dexus continues to own the remaining quarter-share.

In announcing its investment in Dexus Australia Logistics Trust today, Blackstone indicated that it had acquired a majority stake in Grosvenor Place, without elaborating on the transaction details.

Assemble and Sell

GIC had first announced in 2018 that it was investing in Dexus Australia Logistics Trust, with the sovereign investor committing at the time to a 25 percent stake in the core portfolio, with Dexus holding the remaining 75 percent in what was then a A$2 billion venture.

In January of last year the Singaporean fund had exercised an option to pick up an additional 24 percent share in the platform for A$366.1 million, with Dexus, which manages the venture, retaining the remaining 51 percent.

Since founding the venture three years ago, GIC and Dexus have added to the initial seed portfolio through acquisition of existing properties and development sites, including buying a Queensland project for A$26.5 million in 2019 and acquiring plots in Sydney and Melbourne for a combined A$173.5 million in July 2020.

Local media reports in October had indicated that GIC was in late stage talks to sell its interest in the trust, with the sovereign fund said to be turning its attention to growing its logistics partnership with Dexus competitor ESR in Australia.

Sheds, Beds and Sandcrawlers

For Blackstone, the deal announced today is the sixth investment this year for its core-plus real estate strategy and the largest Asia Pacific commitment by the vehicle ever. The private equity firm said JLL had advised on the transaction.

In January of this year the fund manager had put $133 million from the strategy to work buying Lucasfilm’s Sandcrawler office building in Singapore, which it has since renamed Eclipse. Also falling under the strategy was Blackstone’s purchase of a portfolio of 38 apartment assets in the Japanese cities of Tokyo and Osaka.

In Australia, however, the firm continues to see promising returns in warehouses, driven by logistics demand from the forces of online shopping.

“While online sales continue to soar, Australia’s e-commerce penetration rate continues to be low relative to that of other major logistics hubs around the world,” said Blackstone’s head of real estate for Australia, Chris Tynan. “We believe there’s tremendous opportunity for growth, supported by Australia’s strong e-commerce demand.”

In addition to its sale of the Milestone portfolio in April, in May Blackstone raised $663 million selling its 90 percent stake in a 20-asset Australia logistics platform managed by local investment firm Fife Capital to a joint venture between PGIM Real Estate and Canada’s Manulife.

Last month, Blackstone announced that it had acquired Melbourne-based self-storage operator Fort Knox in a deal that local media priced at $297 million.