(Bloomberg) — Blackstone Inc. has agreed to sell a portfolio of UK warehouses valued at £1 billion ($1.3 billion) to Tritax Big Box REIT Plc in a deal that will hand the alternative asset manager a stake in the landlord.
Tritax will pay £632 million in cash — financed by a £650 million loan — and will issue £375 million of new shares to Blackstone, giving the New York-based company a stake of about 9%, according to a statement Monday.
Tritax will issue Blackstone shares at 161 pence, a 13.5% premium to its closing price Friday, but a discount to the EPRA net asset value per share of 188.17 pence reported by the landlord for the six months through June.
Blackstone has been a prolific buyer of warehouses in the UK and Europe, betting on strong demand for space supported by the rise of ecommerce and more recently the impact of supply chain recalibration. The firm has amassed a vast portfolio within its Indurent landlord, an amalgamation of assets mostly acquired through the takeover of two previously listed companies, and has continued to make acquisitions through its funds.
Lackluster trading by the UK’s REITs, whose share prices persistently trail the reported value of their assets, has provided a steady source of deals for Blackstone which most recently acquired Warehouse REIT. But it also means the public markets offer a less attractive option for disposals at a time when large private sales have been rare as the property industry grapples with the end of the zero interest rate era.
Similar Deal
This isn’t the first time Blackstone has pursued this kind of exit strategy, though it has been less common in Europe. It offloaded a portfolio of residential assets to Deutsche Wohnen AG in a similar way in 2013. As a result, the US investing giant became a 5% shareholder in the Berlin-based property investor.
“Our decision to take an ownership stake in Tritax Big Box REIT as part of this transaction reflects our belief in the company’s long-term strategy and outlook,” said James Seppala, chairman of Blackstone Europe.
The majority of assets sold to Tritax was acquired by Blackstone over the past few years, with most coming from its Blackstone Real Estate Partners Europe VI fund, according to a person familiar with the matter. This fund announced its final close in 2020 with €9.8 billion ($11.4 billion) worth of capital commitments.
The deal will push up Tritax’s loan-to-value ratio — a measure of its relative indebtedness — to 35% from 31% previously. The company plans to sell about £300 million of properties over the next 18 months in addition to its previous guidance to reduce it back to the lower end of its 35% to 30% target range.
Blackstone is also considering an offer for self-storage giant Big Yellow Group Plc, according to a statement Monday morning.
(Updates with prior disposal to Deutsche Wohnen in sixth paragraph.)
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