China Investment Corporation (CIC) is poised to acquire Blackstone’s European logistics platform for over 12 billion euros ($13.4 billion), UK property news website The Estates Gazette reported on Monday.
The mainland sovereign wealth fund has reportedly moved ahead of rivals in the pursuit of the Logicor warehouse portfolio, after formal bids having been submitted by last Thursday. CIC is now said to be scheduled to sign a deal for the New York-based private equity giant’s 630 European distribution centres within the next two to three days. If completed, the transaction would mark Europe’s largest-ever real estate deal.
CIC Moves Ahead of GIC and Mapletree
Mingtiandi reported at the end of March that Blackstone was shopping Logicor to institutional investors including CIC, Singaporean warehouse group Global Logistics Properties (GLP), and a joint venture between Singapore’s Mapletree Investments and Temasek Holdings.
The sale of the 13.6 million square metre (146.4 million square foot) warehouse platform would mark the biggest logistics property deal in history. Real estate investment brokerage Eastdil Secured is advising Blackstone in the highly complex transaction, which is said to involve hundreds of special purpose vehicles.
The potential deal comes at the same time that CIC, along with two other bidders including Blackstone, is reportedly vying to purchase Singapore-based logistics platform GLP and its $8.9 billion, 52 million square metre warehouse portfolio across China, Japan and the Americas. GIC is the controlling shareholder in GLP.
China’s Biggest Real Estate Buyer Hungry for More Blackstone DealsCIC is said to benefit from its close relationship with Blackstone, which extends back to the spring of 2007 when the sovereign wealth fund bought a stake in the alternative investment firm just prior to the latter’s initial public offering. In January 2014, CIC purchased London’s Chiswick Park office complex from Blackstone for over £780 million ($1.28 billion).
The mainland fund was also reported yesterday to be among the earlier entrants in a race for an A$3.5 billion Australian mall portfolio held by the US private equity giant.
CIC has emerged as China’s biggest buyer of overseas real estate, amassing extensive portfolios in the US, Europe and Australia. The fund, which is charged with investing China’s $3 trillion in foreign exchange reserves, has in recent years shifted from a reliance on liquid instruments such as US Treasuries, to an increasing focus on infrastructure and real estate assets.
Stephen Schwarzman’s Blackstone originally considered steering Logicor to an IPO, but is reported to have shelved that option in favor of a trade sale, aggressively driving the bidding process forward over the past few weeks. A trade sale would potentially achieve a higher price while allowing Blackstone to dispose of the business in a faster and more efficient manner than an IPO.
Logicor was founded by Blackstone’s real estate business in 2012 and has rapidly grown into one of Europe’s largest warehousing specialists, with modern logistics facilities in 17 countries across the continent. Investors continue to pile into the logistics real estate sector amidst a boom in online retail, soaring prices and relatively high yields compared to other property asset classes.