NEW YORK CITY-Lehman Brothers Holdings Inc. said Wednesday it has completed its sale of a 17.7-million-square-foot warehouse and distribution center portfolio in which LHBI held a majority stake. The buyers were affiliates of Blackstone Real Estate Partners VII and, in a separate transaction, Prologis Inc., LHBI’s minority partner in the portfolio. An industry source confirms that the 82-asset portfolio traded for a total of about $960 million, roughly the figure reported by Reuters and the Wall Street Journal in late May.
Sixty-four of the properties, totaling 9.5 million square feet, are located in Reno, NV and traded to the Blackstone fund. The private equity giant’s IndCor Properties Inc. will manage the Reno portfolio, according to LHBI.
Prologis is acquiring the balance of the portfolio, with approximately 8.1 million square feet located mainly in Las Vegas, southern New Jersey and central and eastern Pennsylvania. The company is not disclosing the properties involved in the sale.
The portfolio sale also means the conclusion of the Prologis North American Industrial Fund III, originally formed in 2007 to acquire what was then a 114-asset industrial portfolio valued at $1.85 billion from a joint venture between Dermody Properties and CalSTERS, the California State Teachers Retirement System. Since then, LHBI and Prologis have reinvested in the portfolio to stabilize both the properties and the capital structure. “The decision to monetize the portfolio today enables Lehman to capitalize on strong demand for high-quality industrial product and deliver significant value to its stakeholders,” according to LHBI.
Blackstone’s share of the pie brings IndCor’s managed portfolio to about 100 million square feet across the US. For Prologis’ part, the acquisition of the Vegas and Mid-Atlantic assets “is in line with our stated objective of expanding our platform within our existing markets through proprietary opportunities,” says CIO Mike Curless. Conversely, he says, the sale of the Reno properties “further supports our portfolio realignment strategy and rationalizes a fund that we have identified as non-strategic to our investment management business.”