Blackstone looks to offload property

The New York-based buyout fund, which has $US564bn of assets under management globally, is in the early stages of revisiting an exit, with a sales process yet to be launched.

Private equity firm Blackstone is once again exploring a move to offload its $700m portfolio of Australian industrial properties that are managed by Fife Capital.

It is understood that the New York-based buyout fund, which has $US564bn of assets under management globally, is in the early stages of revisiting an exit, with a sales process yet to be launched.

Allan Fife owns about 10 per cent of the industrial portfolio through his Fife Capital business, while Blackstone owns the remainder.

It is understood that Mr Fife is keen to retain his holding.

The portfolio of more than 20 properties is spread across cities down the eastern seaboard.

Blackstone hired Rothschild and real estate agency JLL for a sales process at the start of the year.

However, the process was placed on hold at the onset of the coronavirus outbreak.

But since February, industrial properties have sold for bullish prices.

This is at a time they are remain less affected from the economic impacts of COVID-19 than other commercial properties such as shopping centres and offices, with demand fuelled by booming online shopping trade, low interest rates and large amounts of capital still searching for a home.

In June, Charter Hall and its backers paid $648m for a sale and lease back of the ALDI logistics properties in Sydney, Melbourne and Brisbane and acquired the factories from the glass bottle maker Owens Illinois the following month for $215m in another sale and lease back deal.

This came after Centuria purchased two Arnott’s Biscuits factories from Kohlberg Kravis Roberts in Queensland and South Australia for $236m in December, with the sites to be leased back to the Tim Tams, Shapes and Mint Slice biscuits manufacturer.

Globally, Blackstone manages $US167bn of real estate and has a separate industrial portfolio in Australia believed to be worth about $3.5bn.

Some suspect that portfolio will be next on the block for the US buyout fund – either by way of a float or a trade sale.

A strong price achieved for the Fife Capital-managed portfolio could set a benchmark when it comes to reaping top dollar for the remaining Australian industrial assets.

However, Blackstone has typically not opted for initial public offerings when it comes to selling real estate portfolios in the past, although it did list a Real Estate Investment Trust in India last year.

As well as being a major investor in property assets, Blackstone has also been active in the real estate debt markets since 2015.

The Wall Street Journal reported that Blackstone this month closed on the largest real-estate debt fund ever, giving the investment firm plenty of cash to lend to property investors looking to go shopping during the coronavirus pandemic.

Blackstone began raising money for the fund in 2019 and the $US8bn it took in exceeded expectations.

Fundraising received a boost after COVID-19, partly because interest rates fell, increasing the appeal of relatively high-yielding real estate debt.

The fund will make new loans and buy real-estate debt securities along with other investments.

Blackstone’s real-estate debt business has grown to $US26bn of property debt assets under management, up from $US10 billion five years ago.

Other recent closings include a $US950m real estate debt fund raised by KKR that is focusing on the most junior tranches of commercial mortgage-backed securities.

Much of the new capital raised is by firms planning to focus on distress properties.