Blackstone Logistics quietly moves, this time merging two industrial logistics companies in the UK

According to Guandian.com, Blackstone Group recently completed the merger of two large industrial logistics investment management companies in the UK, St Modwen Logistics and Industrials REIT, to create a new industrial logistics platform called Indurent.

In fact, Blackstone had revealed this plan in a letter to employees at the beginning of 2024. The merged company will hold over 200 properties covering 27 million square feet, making it the third largest logistics owner in the UK, after Segro and Tritax Big Box REIT.

Blackstone is the largest alternative asset management company in the United States, headquartered in New York. Known as the "King of PE," its investments span across North America, Europe, Asia, and other regions, covering various industries and sectors including but not limited to real estate, private equity, credit, infrastructure, and hedge funds.

It is reported that Blackstone acquired St Modwen and Industrials REIT in 2021 and 2023 respectively, and delisted them from the London Stock Exchange.

As of the end of the first quarter of this year, Blackstone's assets under management (AUM) reached $1.06 trillion, a 7% year-on-year increase. The group's growth has been driven by the success of its real estate and infrastructure strategies, especially in the data center platform within the field of artificial intelligence.

In a recent financial report, Blackstone's Chairman and CEO, Stephen Schwarzman, mentioned that the current transaction environment is gradually improving, and the company is prepared to utilize nearly $200 billion of dry powder to capture more investment opportunities.

One Merger

The merged Indurent platform is controlled by investment funds managed by Blackstone Group, holding over 200 properties and a 27 million square feet portfolio of industrial and logistics assets. Its operations cover all major cities in the UK and have established partnerships with over 2,000 companies.

Looking back, in 2021, Blackstone privatized the UK-listed St Modwen for £1.2 billion. St Modwen focuses on developing and managing large urban warehouses for global logistics and e-commerce companies, as well as businesses in multiple countries and regions. The acquisition of St. Modwen brought a significant reserve of logistics warehouse projects to Blackstone.

At that time, ST Modwen had three main business divisions focusing on housing construction, warehouses, and urban redevelopment. Starting in 2019, ST Modwen shifted its focus to logistics, with the department accounting for approximately 49% of the company's £1.37 billion investment portfolio.

"Blackstone Group is more willing than most to pay attention to privatization opportunities, and ST Modwen's traditional housing construction business posed a challenge to others interested only in the logistics portfolio." Analyst Peter Papadakos from Green Street once said.

It is worth noting that ST Modwen's strategic land division is responsible for land acquisition and preparing for development through planning procedures, providing Blackstone Group with ready-made opportunities to build more warehouses The new platform Indurent will benefit from St Modwen Logistics' development capabilities and approximately 6000 acres of land reserves. Over the past two years, St Modwen Logistics has delivered approximately 4 million square feet of warehouses.

In March 2023, Blackstone Group privatized Industrials REIT for £700 million, a company focused on multi-tenant industrial assets typically consisting of 5 to 50 rentable units ranging from 500 to 20,000 square feet.

According to Park City Park Review, the privatization transaction in 2023 valued Industrials REIT at over £500 million, representing a 42.2% premium over the stock price at the time of listing.

It is reported that the CEO of this new platform is Julian Carey, former CEO of Industrials REIT, who stated that Indurent is "a fully integrated industrial and logistics company that can provide support for all stages of the customer lifecycle."

Of note, in 2012, Blackstone's real estate division created Logicor, a pan-European logistics real estate company to manage and operate Blackstone's logistics assets in Europe.

Investments always require exits, and a few years later, Logicor, the pan-European logistics real estate company, was sold by Blackstone to China Investment Corporation for €12.25 billion ($13.8 billion).

Logistics Investments in China

Blackstone also entered the Chinese logistics market early on.

In 2013, Blackstone began its logistics real estate layout in China, starting with an investment in a logistics development project in Shanghai. In 2015, Blackstone collaborated with Vanke and invested in Vanke's logistics company.

In 2018, Blackstone established the logistics infrastructure management platform DragonCor in China, focusing on managing its real estate investment portfolio in mainland China, including warehousing logistics, long-term rental apartments, and commercial office spaces.

According to the DragonCor Logistics official website, in terms of warehousing logistics, DragonCor has currently invested in 19 cities, managing over 40 logistics parks with a total construction area exceeding 5 million square meters.

In the same year, Blackstone acquired an 80% stake in Foshan Ruiyou, a logistics subsidiary of Dongbai Group, for ¥275 million; in 2019, its real estate fund signed a strategic cooperation agreement with First Industry Group for comprehensive cooperation on logistics parks.

In 2020, Blackstone continued to increase its investments in logistics real estate, making acquisitions in Foshan, Changsha, Taicang, Wuhan, Zhengzhou, among other locations, while also constructing a new logistics park in Shanghai; in 2021, Blackstone further expanded its presence in the Greater Bay Area by acquiring 100% equity of R&F's comprehensive logistics park in Guangzhou, securing the largest logistics park project in the region at the time.

At that time, Blackstone's CEO and co-founder Stephen Schwarzman emphasized the importance of warehousing and logistics in the Chinese real estate sector, highlighting their role in the logistics chain for online shopping and other e-commerce activities In those years, industrial and logistics were still highly sought-after asset categories. However, the current logistics real estate sector has seen a decline in popularity.

Currently, many logistics real estate management companies are facing rental pressure due to a significant increase in new supply and a decrease in demand.

By the end of 2023, there were reports that Blackstone was interested in selling a package of Chinese logistics assets for over 10 billion RMB, with potential buyers already in line. Subsequently, Blackstone Group publicly stated that they had not entered into any negotiations with any party regarding the sale of logistics assets.

Regarding the future demand for high-standard warehouses in the market, an industry insider told Guandian Xinmeiti that China still has new demand for high-standard warehouses. However, there are issues related to uneven regional development. This has already been reflected in the market's new investments over the past two years. It is believed that after several years of continuous digestion and adjustment, the market will gradually reach a relatively balanced state.

She believes that the next step for the market is to further develop in terms of quality, including integration and regional market differentiation. For example, in some regional sub-markets, there may be a need for increased capacity, while in others, the sub-markets may remain stable. In some regional sub-markets, as urban development needs change, high-standard warehouses will need to undergo storage renewal and quality upgrades