This article is from the Australian Property Journal archive
US private equity giant Blackstone has taken GIC’s interest in the Dexus Australian Logistics Trust (DALT) in a $2.1 billion deal, amid insatiable institutional demand for industrial and logistics assets.
Blackstone’s core plus real estate business will take the 49% stake after making an unsolicited proposal.
Blackstone’s core plus strategies focus on logistics, residential, office, life science office, and retail assets in global gateway cities. Blackstone earlier this year sold the Milestone Logistics portfolio to ESR and GIC for $3.8 billion in Australia’s largest-ever real estate deal, and quickly followed with the sale of a 90% stake in the Fife portfolio for $850 million.
Blackstone has reportedly bought a half share in Sydney’s Grosvenor Place office tower for $925 million from Dexus and the Dexus Office Partnership.
The DALT partnership was established in November 2018 and seeded with 55 assets – worth $1.4 billion plus $500 million of developments -from the Dexus industrial portfolio, with GIC acquiring an initial 25% interest.
GIC took an additional 24% interest in the portfolio last year, and external acquisitions and the build out of the development pipeline has grown the exposure to 77 assets. The portfolio has a circa 90% exposure to Sydney and Melbourne and is weighted to traditional logistics facilities leveraged to the growth of e-commerce, and includes the Ford’s spare parts national distribution centre acquired in a dual-property $173.5 million deal last year.
GIC is selling out of the partnership as industrial yields have been crunched to record lows. The DALT deal is being struck on a yield of sub 4%.
The existing management arrangements for DALT remain unchanged.
Industrial real estate transaction and leasing volumes in 2021 will smash previous records, already tracking at more than $12 billion, and there remains up to $50 billion of unsatisfied capital seeking a home in warehouses, sheds and hardstand across the country.
Industrial real estate is expected to outperform in the coming years. Oxford Economics has given a baseline growth forecast of 9.0% for the next five years, including 15.0% in 2022, driven by structural shifts in consumption and increased demand for supply-constrained urban logistics sites.
“We are pleased to have worked with GIC to grow this high-quality portfolio. This new relationship provides a stable long-term source of capital to invest alongside us,” Darren Steinberg, Dexus CEO said.
Lee Kok Sun, chief investment officer for real estate in GIC, said, “GIC is pleased to have worked with Dexus in growing this logistics joint venture since 2018. The attractive offer from Blackstone is a clear testament to the high-quality portfolio that the GIC-Dexus partnership has built.
“GIC continues to be confident in the long-term growth of the Australian market, including the logistics sector which we believe will present more investment opportunities.”
GIC has just teamed up with Charter Hall to buy the federal government-tenanted 50 Marcus Clarke building in Canberra for $335 million and then with SCA Property Group for a new $750 million metro convenience retail joint venture. It is opening a new office in Sydney next year.
Dexus and GIC last year teamed up for the $644 million joint venture acquisition of a 50% interest in Melbourne’s Rialto Towers.
