Buying Spree: Blackstone to Purchase California-based Logistics REIT for $7.6B

By Mario Marroquin

One week after announcing plans to purchase American Campus Communities for $13.3 billion, Blackstone and affiliates have entered a definitive agreement to purchase all common shares from PS Business Park (NYSE: PSB) in an all-cash transaction for approximately $7.6 billion.

Blackstone and affiliates will acquire a portfolio of 27 million square feet of industrial, low-rise office and multifamily real estate, primarily in the metropolitan areas of Los Angeles, San Francisco, Austin and Washington D.C.

PSB’s holdings, as of December 2021, include:

·         19.3 million square feet of industrial space

·         5.5 million square feet of industrial flex space

·         2.9 million square feet of low-rise suburban office space

·         395 apartment units in McLean, Virginia

“This transaction is an exceptional outcome for our stockholders and a testament to the incredible company and portfolio of high-quality assets our team has built, acquired and enhanced over the years,” Stephen Wilson, president and CEO of PSB, said in a prepared statement.

Blackstone said the purchase price per share ($187.50) represents a 15% premium to the volume weighted average share price over the last 60 days. According to the firm, PSB’s three outstanding series of preferred stock and associated depositary shares will remain outstanding in accordance with PSB’s terms following the closing.

Public Storage (NYSE:PSA), which holds approximately 26% of outstanding shares of PSB common stock, agreed to vote its shares in favor of the transaction.

The transaction is subject to a 30-day ‘go-shop’ period, but the PSB board approved the Blackstone deal unanimously. If no better offer is made for PSB, the equity sale to Blackstone will close in the third quarter of 2022.

As of December 2021, Blackstone held $880.9 billion assets under management, with  $279.5 billion AUM held in the firms real estate business.

Diversified strategy

While Blackstone’s buying spree in the U.S. has shifted to multifamily in recent months, the firm has been an active buyer of industrial portfolios worldwide.

In February, when Blackstone Real Estate income Trust announced it would purchase Preferred Apartment communities for $5.8 billion, the investment firm also announced it would recapitalize European logistics firm Mileway for £21 billion ($26.3 billion).

Mileway’s portfolio spans 1,700 assets totaling 14.7 million square feet of last-mile logistics real estate.

Blackstone announced one month prior that it would launch an Indian logistics platform, which consists of a portfolio of logistics parks owned and managed by Blackstone Real Estate Funds. Also in January, Blackstone Real Estate Income Trust agreed to purchase Resource REIT for $3.7 billion.

The investment firm announced in December that it would acquire a 49% stake in the Dexus Australian Logistics Trust – a venture with a high exposure to logistics in Melbourne and Sydney.   

Blackstone and Cabot Properties agreed to transact $2.8 billion of logistics assets to two vehicles affiliated with Blackstone Real Estate in November. The agreement, for Cabot Properties’ Value Fund V portfolio, traded 15.2 million square feet of industrial real estate in the U.S. and 2.2 million square feet of industrial real estate in Europe.