Blackstone Sells $1 Billion of California Industrial Assets

Blackstone Inc. (NYSE: BX), the world’s largest alternative investment management company, announced that it sold approximately 3 million square feet of industrial properties located in Southern California to Rexford Industrial Realty Inc. (NYSE: REXR), a real estate investment trust focused on investing in and operating industrial properties located throughout infill Southern California.

The portfolio was sold via separate transaction between Rexford and three Blackstone entities, including Blackstone Real Estate Income Trust, the company’s massive non-traded REIT commonly known as “BREIT.”  Specifics regarding the breakdown of the portfolio among BREIT and the other Blackstone entities was not provided, but the REIT is a major owner of industrial properties, with approximately 25% of its $61 billion portfolio comprised of the asset type.

The combined portfolio sold to Rexford comprises 48 properties that are 98% leased, with 99% of the property square footage located within core, infill submarkets in Los Angeles and Orange counties. In aggregate, the investments are expected to generate a weighted average initial unlevered cash yield of 4.7% and an anticipated stabilized unlevered cash yield of 5.6%. These investments were funded using proceeds from Rexford Industrial’s recent exchangeable senior note offerings and cash on hand.

“These strategic investments in exceptionally well-located, high-quality assets within infill Southern California, the nation’s highest-barrier and lowest supply industrial market, represent a significant opportunity to drive accretive cash flow growth, increased operating margins, and long-term value creation,” stated Howard Schwimmer and Michael Frankel, Rexford co-chief executive officers.

“With these transactions, we are pleased to further our Blackstone relationship and look forward to identifying opportunities for future collaboration. Looking forward, our total pipeline comprises approximately $300 million of investments under contract or accepted offer, bringing the aggregate year-to-date $1.4 billion of investments completed or in the pipeline, to a weighted average 5% anticipated initial unlevered cash yield and anticipated 5.7% stabilized unlevered cash yield,” added the co-CEOs.

The transactions are an excellent outcome for our investors, said David Levine, co-head of Americas acquisitions for Blackstone Real Estate, “and demonstrate the strong institutional demand for high-quality assets in attractive markets like Southern California, where we own over 50 million square feet of warehouses.”

“Logistics continues to experience near record low vacancy and remains a high conviction theme for Blackstone Real Estate globally; we are proud owners of $175 billion of warehouses around the world. Along with our portfolio company Link Logistics, we are pleased to work with Rexford on these transactions, who will be an excellent steward of these properties going forward,” added Levine.

Rexford Industrial invests in, operates, and redevelops industrial properties throughout infill Southern California. Rexford’s portfolio comprises 422 properties with approximately 49 million rentable square feet occupied by a stable and diverse tenant base. Structured as a real estate investment trust listed on the New York Stock Exchange under the ticker “REXR,” Rexford Industrial is an S&P MidCap 400 Index member.

Blackstone Real Estate was founded in 1991 and has $337 billion of investor capital under management. Blackstone’s core business invests in substantially stabilized real estate assets globally, through both institutional strategies and strategies tailored for income-focused individual investors including Blackstone Real Estate Income Trust Inc., a U.S. non-listed REIT, and Blackstone’s European yield-oriented strategy.

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