NEW YORK CITY—Blackstone has entered into a definitive agreement to acquire Colony Industrial, the industrial real estate assets and affiliated industrial operating platform of Colony Capital, for $5.9 billion.

The last-mile light industrial portfolio consists of 60 million square feet of infill, logistics assets across 465 light industrial buildings in 26 US markets, with significant concentration in Dallas, Atlanta, Florida, northern New Jersey, and California. The transaction also includes Colony's 51% ownership interest in a four million square foot portfolio of bulk distribution assets and the affiliated operating platform which manages the properties of both portfolios. Colony is expected to net more than $1.2 billion in proceeds from the transaction.

Colony Industrial was formed in December 2014 through Colony Capital's acquisition of Cobalt Capital Partners, founded and led by Lewis D. Friedland. Since then, the portfolio has doubled in size, producing strong operating results.

The acquisition will bolster Blackstone's outsized footprint in industrial real estate, especially last mile facilities. Last week, the private equity giant closed on another mammoth industrial transaction—its previously announced acquisition of US logistics assets from three of GLP's US funds for $18.7 billion. Specifically, Blackstone Real Estate's global opportunistic BREP strategy picked up 115 million square feet for $13.4 billion and its income-oriented non-listed REIT, Blackstone Real Estate Income Trust bought 64 million square feet for $5.3 billion.

"This acquisition of high quality warehouses demonstrates our continued strong conviction in logistics and positive e-commerce trends," Nadeem Meghji, Blackstone's head of Real Estate Americas says in prepared remarks about its latest deal. "As retailers continue to shorten delivery times and expand their last mile footprints, we believe warehouses in dense population centers will continue to experience outsized demand growth."

For Colony, the sale will accelerate its transition into digital real estate and infrastructure, according to president Darren Tangen. It also will deliver "compelling returns" for its investors and generate significant liquidity, he adds.

Each of the agreements is subject to customary closing conditions, including third party consent for the sale of the 51% interest in the bulk industrial portfolio, and is expected to close in the fourth quarter of 2019.

Willkie Farr & Gallagher served as legal counsel, and Morgan Stanley and Eastdil Secured served as financial advisors, and CBRE National Partners served as real estate advisor to Colony Capital. Simpson Thacher & Bartlett served as legal counsel to Blackstone.

Instant Insights /

Blackstone to Buy US Logistics Assets from Colony Capital for $5.9B

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