Blackstone Group has surpassed the $10bn mark in commitments to its core real estate strategy, which has focused recently on growth segments such as warehouses for distributors and production studios for digital content creators.
The New York private equity giant reported last week that its Blackstone Property Partners LP fund and related vehicles had collected more than $10.14bn so far, raising more than $1.2bn in little more than a year. The perpetual fund dates back to 2014 and remains open-ended.
Blackstone recently has focused on investing in sectors viewed as resistant to the drag presented by the coronavirus pandemic, such as certain technology industries, as well as those seen as benefiting from social trends stemming from pandemic-prompted lifestyle changes. Those areas include rapidly expanding e-commerce demand and a growing appetite for online content.
“We’re one of the largest landlords to content creators and tech companies,” Michael Chae, the firm’s chief financial officer, said during Blackstone’s second-quarter earnings call last month. In a note posted on the firm’s website last week, Blackstone said that demand for digital content doubled during the pandemic. Content creation is among the firm’s “high conviction” investment themes, the note said.
In June, Blackstone agreed to acquire a 49% stake in Hollywood studios operated by Hudson Pacific Properties in a deal that valued the properties at about $1.65bn. The creative spaces are anchored by Netflix and Walt Disney, Jon Gray, Blackstone’s president and chief operating officer, said during the earnings call.
“This complements our significant media-related holdings of over half the Class-A office space in Burbank, Calif.,” Gray added. The Property Partners strategy involves a longer investment time horizon and lower return targets than is typical of most private equity funds, Blackstone has said in investor presentations.
Warehouses comprise roughly a third of the assets held by Blackstone’s various real estate strategies, Chae said on the earnings call.
“These investments continue to benefit from growing e-commerce demand, which based on our internal data analysis, is up over 60% year-over-year in the US since the onset of the crisis,” Chae said, referring to the pandemic. “Indeed, market pricing for warehouses today is higher than it was pre-Covid, reflective of these positive trends.”
Blackstone already was amassing logistics sites before the pandemic.
Last year, the firm agreed to acquire hundreds of US warehouses through two deals with a combined value of about $24.6bn.
In the larger of the two transactions, the firm said it would pay $18.7bn for a network of US industrial warehouses owned by Singapore-based GLP. The deal included $8bn in debt, The Wall Street Journal reported at the time.
The other deal called for the firm to pay Colony Capital $5.9bn, including debt, for a portfolio of US industrial warehouses.
Nadeem Meghji, who runs Blackstone’s real-estate business in the Americas, cited rising demand from online commerce for shipping and logistics facilities as part of the rationale for the September 2019 deal.
Source: Wall Street Journal
