Major alternative investments manager Blackstone is bolstering its presence in China with a $1.1 billion investment for a 70% stake in a Greater Bay Area urban logistics park.
The investment will help Blackstone acquire majority ownership in the 1.2 million-square meter logistics park located in Guangzhou, expanding the firm’s logistics portfolio in the country by a third, Blackstone said in a statement Tuesday. The park, located some 15 kilometers from the city’s international airport, houses tenants including third-party logistics providers such as SF Express and YTO Express, and e-commerce players such as Alibaba Group Holding-controlled Tmall, and JD.com.
Blackstone acquired the stake from property developer R&F Group, which will retain a 30% stake in the park. The deal comes at a time when the Greater Bay area, a region comprising 11 cities in southern China, including Shenzhen, Macau and Hong Kong, is increasingly being seen as a driver for economic growth and drawing investments from developers.
“The investment also complements our existing Chinese logistics portfolio geographically, which will total 53 million square feet and give us a presence in 23 cities once the acquisition is complete,” said Justin Wai, a Blackstone Real Estate managing director based in Hong Kong. “Logistics remains among our highest conviction global investment themes and we continue to see strong momentum driven by e-commerce trends.”
Guangzhou R&F Properties, in a separate statement to the Hong Kong stock exchange, said about 889,820 square meters of rentable area of warehouses, plants and cold storage have so far been completed. R&F Properties estimates a gain on disposal of about RMB1.5 billion ($167 million) based on the fair value of the assets as of Sept. 30.
R&F Properties’ board “intends to apply the net proceeds from the merger to lower the gearing and as general working capital of the group,” the Chinese company said in its stock exchange notice.
Blackstone’s real estate business, founded in 1991, currently has $174 billion of investor capital under management and is one of the largest property owners in the world. The firm says that it has acquired more than 1 billion square feet of logistics globally since 2010.
“The Greater Bay Area is rapidly emerging as a financial, technology and transportation hub and one of China’s biggest logistics markets,” Cliff Chen, a Blackstone managing director based in Shanghai, said in the asset manager's statement.
Blackstone's resources will enable it to drive plans “for the park’s future growth, including constructing additional cold storage facilities and institutional-quality warehouses to cater to rising demand,” he added.
