NEW YORK CITY—For the Blackstone Group, the $8.1-billion sale of 117 million square feet of US industrial to GIC Pte. Ltd. marks the logical culmination of a process that began when the asset management giant began buying such properties near the bottom of the market four years ago. Blackstone had prepared earlier this year for an initial public offering as another possible way of exiting its IndCor industrial platform; Savills Studley's Borja Sierra tells GlobeSt.com the reasons it ultimately chose not to take that path boil down to one simple consideration.

“It was to maximize value,” says Sierra, head of US capital markets with Savills Studley. The reasons a private sale offered better pricing than going to the public markets, and therefore meant greater returns to Blackstone's investors, he says, “are probably related to the timing and cost of putting together an IPO, and to the fact that the current multiples of REITs in this type of product are still affected” by the lack of appeal industrial held among most investors for some time after the downturn. “Their focus was elsewhere, on core income opportunities.”

But Blackstone “foresaw the market years before it moved,” says Sierra. Accordingly it began buying up a large number of industrial assets in anticipation of demand that didn't exist yet.

Subsequently, he says, “It put in place a management structure and created an institutional-quality product which it can now exit. Blackstone tends to be a front-runner, and then many others follow.” He cites the company's pioneering forays into European commercial property as one example; as another, “they bought hotel companies at a time when the hotel business was only going south.” In common with industrial, the lodging sector's fortunes have risen considerably since then.

And the ascendency of industrial meant that now was an especially opportune time for GIC to dive into the pool with one of the largest portfolio acquisitions since the downturn. For large sovereign wealth funds such as GIC, “we are now at the peak of interest in coming to the US.” Given the current economics of the US and the current state of the real estate market, investing here seems especially advantageous when compared to the overseas alternatives available to European or Asian SWFs.

In terms of places for the funds to put their money, “commodities are not telling a particularly good story right now, and stocks are kind of wobbly,” says Sierra. That puts real estate into an especially favorable light.

Further, for wealth funds that have billions of dollars that must be allocated, “finding large portfolios is difficult,” he says. “And this is one of them. It was a great opportunity.”

Not only the scale but also the pricing were strong draws for Singapore's SWF. With years of growth still ahead for industrial, paying about $80 per square foot for institutional-quality properties “sounds very reasonable,” says Sierra.

At present, Blackstone is in the early stages of replicating an industrial platform on the scale of IndCor with its LogiCor business in Europe. When that platform is built out, recent history has seen Blackstone take a number of approaches to carrying out its basic “buy, fix, sell” strategy, and Sierra says it's too early to tell which form an exit from LogiCor will take. However, he says, “I have no doubt that it will be the solution that represents the greatest value.”