Blackstone has reached agreement on the £700 million take-private of UK multilet industrial investor Industrials REIT.
In a stock market announcement the REIT said the Boards of the bidding company set up by Blackstone on behalf of its funds and Industrials REIT had agreed the terms of a recommended cash acquisition of the entire issued and to be issued ordinary share capital of Industrials.
The deal breaks down to an offer of 168 pence in cash per share, a 42.4% premium to the closing price of 118p on 31 March 2023, the last business day prior to the offer period beginning.
It values the entire issued and to be issued ordinary share capital of Industrials at approximately £511,196,472, while there is around £200 million of debt included.
Established in 2012 and headquartered in London, Industrials REIT has a primary listing on the premium listing segment of the Financial Conduct Authority's Official List and is admitted to trading on the premium segment of the London Stock Exchange’s Main Market for listed securities. Industrials also has a secondary listing on the Johannesburg Stock Exchange.
In 2018 Industrials converted to a UK REIT and announced a transition phase to become a 100% focused UK multilet REIT. This completed on 5 April 2023 following the disposal of Industrials’ interest in the joint venture in care homes located in Germany.
Industrials operates a technology-enabled operating platform, Industrials Hive, that manages the process of selling leases over industrial space. Industrials offers its Smart Lease via the Industrials Hive platform, an automated outline process.
As of 31 March 2023, Industrials had a market capitalisation of £350,295,328. Industrials has been advised by Numis Securities and Eastdil Secured.
Blackstone is the world’s largest alternative asset manager. Its asset management businesses, with $975 billion in assets under management as of 31 December 2022, include investment vehicles focused on real estate, private equity, public debt and equity, non-investment grade credit, real assets and secondary funds, all on a global basis.
Blackstone’s real estate business was founded in 1991 and has $326 billion of investor capital under management as of 31 December 2022. Blackstone is one of the largest property owners in the world, owning and operating a $577 billion real estate portfolio as of 31 December 2022 across every major geography and sector, including logistics, multifamily and single family housing, office, hospitality and retail.
This week it said the final close of its latest global real estate fund, Blackstone Real Estate Partners X, with $30.4 billion of total capital commitments is the largest real estate or private equity drawdown fund raised on record.
It said its three opportunistic strategies – global, Asia and Europe – now have $50 billion of capital commitments. With the large influx of capital, Blackstone said it has been shifting its focus from traditional malls and offices to areas including logistics, as well as life sciences, hospitality and rental housing.
Blackstone has been one of the largest investors in UK industrial in recent years particularly via the Mileway business, the largest owner of last-mile logistics real estate assets in Europe. That has over 1,600 assets across 10 major European countries. Mileway’s largest markets include the UK, Germany, the Netherlands, Sweden and France, and it has a significant presence in Denmark, Italy, Spain, Finland and Ireland. It has over 360 employees across 26 offices.
Blackstone recapitalised the business in February of last year by selling it from its private equity funds to outside institutional investors and some of its lower risk return vehicles. At the time, it said that at €21 billion, or $23.8 billion in US dollars, it was the world's largest real estate transaction ever recorded.
It also took St. Modwen, the UK industrial and residential group, private in June 2021 for £1.3 billion.
Richard Grant, the chair of Industrials, explained in a statement: “Over the past few years Industrials has successfully pivoted its business to focus on the UK MLI segment. Strong occupier demand has continued to drive substantial rental uplifts across our portfolio and our assets remain highly affordable and continue to attract an increasingly diverse range of businesses. Despite our strong financial position and focused strategy, the company’s access to capital and ability to deliver shareholder value is naturally subject to external factors, many of which are outside of our control.
"The Board has therefore been able to evaluate today's recommendation from a position of strength. Mindful of the growth opportunity in the industrial real estate sector, initial approaches were rejected. However, following careful consideration and reflecting on the uncertain macro-economic backdrop, we believe this offer is in the best interests of Industrials shareholders providing them with cash certainty at an attractive premium to the pre-offer share price and significantly accelerating the value that could be realised by Industrials if it were to remain listed. Additionally, the Board is reassured by Blackstone's views and approach to investing in the business and supporting our people.”
James Seppala, head of Blackstone Real Estate Europe, said: “As one of the largest investors in logistics real estate globally and in the UK, we have been preparing for this cycle for a long time and have assembled a high-quality portfolio and positioned it for growth. We have the track record, capital and scale to enable Industrials to capitalise on the opportunities ahead.
"Blackstone has been an active investor in the UK for over 20 years and we have deployed over $27 billion in the country over that period, supporting nearly 90 businesses. This acquisition sees us doubling down on the logistics sector and the UK which is our largest logistics market in Europe."