Blackstone Said Buying Warburg Pincus India Logistics JV for $700M

Already India’s largest office landlord, Blackstone may soon become the country’s biggest warehouse owner through the purchase of a 22 million square foot (2 million square metre) logistics joint venture, according to local news reports.

Having acquired more than 1 billion square feet of warehouses globally over the past decade, Blackstone is said to be offering $700 million to purchase Embassy Industrial Parks, a logistics joint venture between its US rival Warburg Pincus and India’s Embassy Group, which partnered with Blackstone to launch the Embassy Office Parks REIT in 2019.

The deal, which was reported earlier today in India’s Economic Times, is said to be in the final stages, and is expected to be formally announced within days. Contacted by Mingtiandi, representatives of Blackstone and Warburg Pincus declined to comment.

Five Years to Exit

Established by Jitendra Virwani’s Embassy Group and Warburg Pincus in 2015, Embassy Industrial Parks has been expanding its portfolio as India’s e-commerce market drives demand for warehouse space.

In 2019 the joint venture partners announced that Embassy Industrial Parks would invest another $300 million in developing new logistics and industrial facilities across the country and last September announced a plan to begin work on a 1 million square foot second phase of a facility in Bilaspur, Gurgaon. Warburg Pincus had originally committed $175 million to the joint venture, with Embassy Group committing $75 million, according to local news reports.

Nearly 16 percent of Embassy Industrial Parks’ portfolio is leased to e-commerce players including Amazon, fashion platform Myntra and infant care marketplace FirstCry, as well as third-party logistics providers such as Rhenus Logistics, Mahindra Logistics and Delhivery.

Should the deal be completed, it would be the single largest transaction ever of warehouse assets, with Blackstone stepping in after two of Asia’s largest logistics developers reportedly failed to reach an agreement to buy out Embassy Industrial Parks.

Both Indospace, the India-based partner of GLP, and ESR, which until recently was controlled by Warburg Pincus, had reportedly been in talks late last year to acquire Embassy Industrial Parks, only to have those discussions conclude without a deal, due to differences in valuation, according to a report in India’s Business Standard.

At the reported consideration, Blackstone would be paying the equivalent of $31.82 per square foot of space for the company.

Stocking Up on Sheds

For Blackstone, the Embassy Industrial Parks acquisition would add to a growing portfolio of India warehouse assets.

Stephen Schwarzman’s fund management giant entered India’s warehouse market in December 2019 through an INR 25 billion (then $350 million) joint venture with Mumbai-based real estate developer Hiranandani Group. Blackstone took a 50 percent stake in that joint venture, according to local press accounts at the time.

The company then bought a $53.6 million slice of Mumbai-listed Allcargo Logistics in January of last year.

Already a significant owner of logistics assets in China, Blackstone upped its holdings by $1.1 billion in November of last year with its purchase of a Guangzhou warehouse facility from Guangzhou R&F Properties.

The firm has also been building up its set of Japanese distribution centres with a $523 million purchase of a set of facilities from Daiwa in August of last year, and the $920 million purchase of a portfolio of Mapletree logistics facilities in the country in mid-2019.