Who will snare the Beast in Blackstone

Who will snare the Beast in Blackstone

The race for the biggest logistics and general property deal in Australia to date, a $3 billion-plus portfolio of logistics assets accumulated by Blackstone, has been narrowed to four contenders, who may yet see the prize snatched from their hands for an IPO offering instead.

The portfolio encompasses 45 income-producing assets across major cities including Adelaide, Brisbane, Melbourne, Perth and Sydney, covering a total land area of 3.6 million square meters (38.8 million square feet).  The deal is expected to provide an initial yield of 4.5% with a 6.9-year weighted average lease expiry, ESR said in a statement.

Early March, 5 bibbers were through to the final round. They include; Dexus, Logos, Mapletree, ESR, and AXA Investment Managers. This week, two of the parties joined forces: local investment house Logos and Axa Investment Managers. ASX-listed Dexus, along with Asian powerhouses ESR and Mapletree also lodged their bids this week. .  Some of the country’s top property fund managers had already fallen out of the race before the final round, including Charter Hall Group, Centuria, GPT, Stockland and Mirvac.

The bids have come in at about a 4 per cent investment yield, considered a sharp yield in the industry and one that points to strong pricing for the keenly sought assets Blackstone has assembled. The bid yield for the portfolio will be a closely watched benchmark that could effectively re-rate large pools of industrial assets across the Australian commercial property sector. The lower the yield, the higher the price

The final four have no guarantee of success, however, as Blackstone has run a dual-track process, appointing investment bankers at Morgan Stanley and JPMorgan to prepare for a potential float of the same portfolio. Over the next few weeks, the results of the IPO effort will be assessed against the trade sale track, which has been run by JLL and Eastdil Secured.

Averaged across the portfolio, the leases’ expiries are at 6.8 years. The properties are 98 per cent occupied and include blue-chip tenants such as cold storage operator Lineage Logistics, Caterpillar dealer WesTrac and Toll.

As the Milestone process nears its end, Blackstone has separately stepped up its pursuit of Crown Resorts, by offering to take on more of the regulatory risk, a rich prize that includes a juicy real portfolio dominated by high-profile hotels in Perth, Melbourne and Sydney. Blackstone could well be considering the merits of a real estate carve-out should its tilt there be successful.


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