A Blackstone-owned logistics facility in mainland China (Image: DragonCor)
Blackstone has agreed to pay RMB 279 million ($38.9 million) to take full control of a portfolio of four mainland China warehouses, according to stock market announcements over the weekend.
The US alternative investment titan is buying out the 20 percent shares owned by Shanghai-listed Fujian Dongbai Group in companies holding two logistics assets in the Guangdong provincial city of Foshan and one each in Tianjin and Chengdu, with the portfolio spanning 493,000 square metres (5.3 million square feet) of gross leasable area.
“The transaction will effectively revitalise the company’s existing assets, optimise the company’s asset structure, enhance liquidity and efficiency, increase operating capital, and aligns with the company’s overall interests and long-term development needs,” Fujian Dongbai said in a stock exchange filing on Saturday.
Blackstone, which declined to comment on the transaction, had acquired 80 percent stakes in the assets from Fujian Dongbai in separate transactions in 2018, 2019, and 2020 with the properties forming part of the US private equity giant’s DragonCor mainland Chinese logistics platform.
Mixed Profitability
Manhattan-based Blackstone is acquiring the interests at a blended price of RMB 2,832 per square metre and is paying a 5.9 percent premium to the portfolio’s independently appraised value of RMB 1.3 billion as of 31 December 2023. The disposal has been approved by Fujian Dongbai’s Board but remains subject to shareholder approval.
Justin Wai, head of China real estate at Blackstone
Foshan Leping Logistics Park and Foshan Lubao Logistics Park, which represent the most valuable assets in the portfolio, were profitable in 2023 and the first three months of 2024.
The two logistics parks carry appraised values of RMB 490 million and RMB 478 million, respectively with Blackstone paying RMB 4,201 per square metre for Foshan Leping Logistics Park and RMB 3,584 per square metre for Foshan Lubao. The properties are both located in the city’s Sanshui district and measure 118,000 square metres and 138,000 square metres in gross leasable area, respectively.
The portfolio’s remaining properties – Tianjin Ninghe Logistics Park and Chengdu Xinjin Logistics Park – lost money in 2023 and the first three months of 2024. Blackstone is paying RMB 1,799 per square metre for the stake in the 139,000 square metre Tianjin property, while it is acquiring the interest in the Chengdu asset, which measures 98,000 square metres of gross leasable area, for RMB 1,589 per square metre.
Blackstone’s DragonCor portfolio comprises 42 logistics parks totaling 5.1 million square metres of floor area across 19 cities in mainland China, according to the company’s website.
The disposals by Fujian Dongbai Group come after the company in 2022 sold three Yangtze River Delta region sheds to Hong Kong’s Link REIT for RMB 947 million (then $139.3 million).
Southern China Outperforms
Blackstone’s investment comes as warehouse leasing in southern China outperforms other major markets in the country. With cities like Guangzhou, Dongguan and Shenzhen serving as as supply chain hubs for cross-border e-commerce players and high-tech manufacturers, Guangdong province has sustained stable growth in warehouse rents while landlords in northern China and the Yangtze River Delta now face headwinds.
Only seven Chinese cities are expected to see logistics rents climb this year, according to a July report from CBRE, with five of those hubs located in Guangdong.
Those figures compare to projected annual rental declines of 17.5 percent in Tianjin, 6.4 percent in Chengdu, and 3.1 percent in Shanghai.
Nationwide, average logistics vacancy rose by 0.6 percentage points to 22.2 percent in the second quarter, with vacancy around Beijing and Shanghai now exceeding 25 percent. In southern China vacancy averaged just 3.4 percent during the period, according to CBRE.
In February, Hong Kong-based alternative investment manager Gaw Capital Partners sold a pair of industrial parks in Jiangmen and a facility in Xi’an, with sources pointing to Chinese insurance giant Ping An as the buyer.
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