Prologis acquiring 14 million square feet from Blackstone Industrial Portfolio in $3.1 billion deal

San Francisco-based real estate investment trust company Prologis made a major acquisition this week, in rolling out its plans to acquire roughly 14 million square-feet of industrial properties “from opportunistic real estate funds” affiliated with New York-based global real estate investor Blackstone Real Estate.

Prologis said that the purchase price was $3.1 billion, which was funded by cash, adding that the acquisition price represents around a 4% cap in the first year and a 5.75% cap rate in adjusting to current market rates. This acquisition is expected to be completed by the end of the second quarter, according to Prologis.

The companies have completed more than a dozen industrial real estate transactions going back to 2012, with Prologis observing that leadership at each company valuing the relationship and the opportunities it creates to execute on their respective strategies across markets and cycles.

“We're pleased to be working with Blackstone on this deal. These high-quality properties are complementary to our portfolio and fit perfectly into our long-term strategic plan for growth,” said Dan Letter, president, Prologis, in a statement. “The acquisition demonstrates our unique ability to add significant scale to our portfolio—expanding customer relationships and increasing opportunities for our growing Essentials platform.”

When asked what drove the need for Prologis to acquire this portfolio from Blackstone, a Prologis spokesperson told LM that the company has continued to evaluate and pursue acquisitions, especially as the challenges to replace this real estate grow due to escalating construction costs and headwinds for entitlement, and more opportunities arise from the current economic environment.  

“We are excited about this deal and its enhancement to our scale in our top markets,” the spokesperson said. “These high-quality properties are complementary to our portfolio and fit perfectly into our long-term strategic plan for growth. We believe these properties will perform well under our platform, including property management, revenue management and our Essentials offerings.”

What’s more, the Prologis spokesperson said that the properties being acquired from Blackstone by Prologis are concentrated in and around cities and close to consumers, with 60% of the properties well-positioned for direct-to-consumer delivery.

“Additionally, we are growing our relationships with 50 current customers and creating relationships with 77 new ones,” the spokesperson said. “They will be able to tap into our Essentials offerings, further helping them to manage and grow their business.”

Nadeem Meghji, head of Blackstone Real Estate Americas, said this transaction demonstrates the exceptional demand for high-quality warehouses, adding that where one invests matters and this transaction highlights what he called exceptional demand for high-quality warehouse.

“With near record low vacancy, logistics remains a high conviction theme for us; we are proud owners of $100 billion of warehouses in North America and $175 billion in total around the world,” said Meghji. “ And, of course, Prologis is a world-class company that knows this space as well as anyone.”