Global investment giant Blackstone sold a 48-property portfolio of Southern California industrial buildings to investment trust Rexford Industrial Realty in a $1 billion deal, the companies announced Thursday.
A joint statement said the properties are primarily in Los Angeles and Orange counties and total more than 3 million square feet. A full list of properties was not available, and the companies did not immediately respond to requests for comment from CoStar News.
A spokesperson for Link Logistics, Blackstone’s U.S.-focused industrial property subsidiary, told CoStar News the companies were not releasing a list of properties in the deal. Rexford, among California’s most active industrial investors, plans to fund the purchase with cash on hand and the proceeds from a recent senior note offering, the statement said.
The deal is among Southern California’s largest by total price for industrial properties of the past year and amounts to about $332 per square foot. The sold portfolio is 98% leased, with 99% of the square footage concentrated in core, infill regions of Los Angeles and Orange counties, according to the statement.
“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,” Los Angeles-based Rexford said in a statement that included comments from Howard Schwimmer and Michael Frankel, the company’s co-chief executive officers.
Officials said Rexford is scouting future deals involving New York-based Blackstone. Rexford is among the nation’s largest and most active industrial-focused real estate investment trusts, and has $300 million of investments currently under contract or with offers accepted, officials said.
David Levine, co-head of Americas acquisitions for Blackstone Real Estate, said the deal represented “an excellent outcome for our investors” and demonstrated “strong institutional demand for high-quality assets” in markets like Southern California.
Blackstone still owns more than 50 million square feet of warehouses in the region and a global logistics portfolio valued at $175 billion, officials said.
Investment Opportunities
CoStar data shows Southern California has some of the nation’s lowest industrial vacancy rates, as new development has faced limiting factors, including land availability and pricing. Industrial demand in the Los Angeles area has increased significantly in the past decade, fueled by the rise of e-commerce and requirements for fast deliveries, but that demand has leveled off somewhat since the early months of the COVID-19 pandemic.
The Los Angeles region currently has a 4.9% industrial vacancy rate and posted rent growth of 1.3% during the past year. The region registered $4.6 billion in industrial property sales during the past 12 months, down 48.5% from the prior year, according to CoStar data.
Rafael De Anda, director of market analytics for CoStar Group in Los Angeles, said industrial rent growth in the region has plateaued, but multiple years of gains have helped to create investment opportunities. However, deals offering optimal pricing and return on investment in the region have materialized primarily through single-property rather than portfolio deals.
“It’s no secret that there’s been a drastic pullback in large portfolio deals involving industrial properties in Southern California since the start of 2023,” De Anda said. “For Rexford, which has been involved in many of the largest trades over that period, acquiring nearly 50 properties in one scoop helps the firm anchor the price.”
De Anda said industrial portfolio deals over $1 billion have been rare nationwide since Blackstone’s $13.4 billion acquisition of an 839-property portfolio from investment firm GLP in September 2019.
The Southern California deal is considerably large for Rexford, considering the company reported a total of $1.5 billion in investments for all of 2023. During a quarterly earnings call last month, company officials said Rexford, which currently owns about 32 million square feet across Southern California, planned $150 million in investments over the next few months.