Blackstone Buys WPT Industrial REIT for $3.2B

Image by Jake Nebov via Unsplash

Blackstone Real Estate Income Trust Inc. will soon expand its U.S. industrial holdings by approximately 37.5 million square feet now that the perpetual-life real estate investment platform has signed an agreement to acquire Toronto-based WPT Industrial Real Estate Investment Trust. The all-cash transaction, which includes the assumption of debt, calls for BREIT to purchase all outstanding units of WPT for a total of $3.2 billion.

The WPT deal fits like a glove with BREIT parent company Blackstone’s current portfolio performance. “Our overall real estate returns continue to be driven by gains in logistics, which now comprises approximately 40 percent of the global portfolio along with U.S. suburban multifamily, life sciences office, and in the second quarter, U.S. hospitality,” Michael Chae, CFO of Blackstone, said during the global investment management giant’s second quarter 2021 investor call on July 22, 2021.

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WPT comes to the table with a portfolio that is approximately 97 percent leased and spans 20 U.S. states. The collection encompasses 110 logistics assets under management, including 91 consolidated properties and an additional 17 properties in equity accounted joint ventures.

Notable assets include the brand-new 99 and 105 Ave. A in Bayonne, N.J., two fully leased buildings totaling approximately 350,000 square feet. WPT developed the facilities through a private capital joint venture and completed the acquisition of the remaining 90 percent equity interest in the buildings earlier this year in a $61.4 million off-market transaction.

In early 2020, WPT added 9 million square feet to its collection in one fell swoop with the purchase of a 26-property distribution and logistics portfolio for $730 million

Next steps

Per terms of the agreement, unitholders will receive $22 per unit, a figure that not only amounts to a 17.1 percent premium over the closing price on the day immediately prior to the transaction announcement, but also marks an all-time high price for the unit. Having unanimously approved the deal, WPT’s board of trustees is recommending that unit shareholders cast their vote in favor of the transaction. Plans have been made for a special meeting in early October 2021 for unitholders to vote on the proposed agreement.

If all goes as planned, the transaction will close in the fourth quarter of 2021. WPT will expand its logistics footprint across key U.S. markets with the acquisition of BREIT, but its success extends well beyond the industrial sector.

BREIT has a diversified portfolio of multifamily, net lease, hospitality, self-storage, retail and office assets concentrated in growth markets. “BREIT continues to show particular strength,” Chae noted during the investor call. “Since inception five years ago BREIT has delivered 11 percent net returns annually.”

Blackstone officials also noted during the call that Blackstone’s real estate Core+ business is the firm’s largest single engine of perpetual capital. With a total $34 billion following nearly $6 billion raised in the second quarter, BREIT is the largest of the five vehicles that comprise the Core+ business. Keen to capitalize on BREIT’s triumphs, Blackstone is modeling another vehicle on the platform with the planned launch of a sixth Core+ vehicle, Blackstone European Property Income Fund, which will target European real estate.