Prologis Buying $3.1B In Industrial Properties From Blackstone

Prologis agreed to buy 14M SF of industrial property from Blackstone in a $3.1B all-cash deal aimed at strengthening its position as the world’s largest industrial property company.

The acquisition of about 70 properties expands Prologis’ real estate portfolios in Atlanta, Washington, D.C., California, Dallas, Las Vegas, New York and New Jersey, Phoenix and South Florida, the companies said in a joint press release.

Prologis, a real estate investment trust, owns 1.2B SF of logistics real estate in 19 countries. It plans to hold all of the newly acquired properties, the release says.

The $3.1B acquisition price represents a cap rate of about 4% in the first year and a 5.75% cap rate when adjusted for current market rents, per the release. The transaction is expected to close by the end of the second quarter.

Prologis has historically grown by both developing and acquiring property. It has focused more on the latter since rising construction costs and delays in approvals from local governments have made new development more challenging, The Wall Street Journal reported.

The industrial REIT purchased rival Duke Realty last year in a $23B deal, the largest commercial property transaction since the beginning of the pandemic, according to the WSJ.

The deal with Blackstone shows “exceptional demand for high-quality warehouses” as the logistics industry experiences near-record-low vacancy rates, Blackstone Real Estate Americas Head Nadeem Meghji said in the press release.

The national industrial vacancy rate in Q1 was 3.8%, a slight uptick from the previous quarter but well below the 5% rate where it hovered between 2017 and early 2021, a JLL report shows.

Blackstone owns $100B worth of warehouses in North America and about $175B around the world, Meghji said in the release. The assets Blackstone is selling to Prologis are held by Blackstone’s opportunistic funds, which usually sell properties after holding them long enough to see values increase, the WSJ reported.