Tag Archives: Warehouses

GIC bought IndCor from Blackstone Group

SINGAPORE sovereign wealth fund GIC has confirmed news that its affiliates will buy US industrial property company IndCor Properties Inc from Blackstone Group LP for US$8.1 billion, making it yet another major real-estate investment for the fund.

A GIC spokesman confirmed the purchase on Tuesday, following Blackstone’s announcement of the deal.

The move gives GIC and its affiliates a significant presence in the US warehousing space, thanks to Chicago-based IndCor’s ownership of some 117 million square feet of industrial real estate throughout the country.

The deal also puts paid to IndCor’s plans for an initial public offering. Blackstone had been intending to exit IndCor through a share offering that would have valued IndCor at about US$8 billion, but clearly found the sale to GIC – a more immediate realisation of its investment – the more attractive alternative.

The investment by GIC and its affiliates comes at a time when demand for commercial real estate, and prices for such real estate, in major markets is rising. Warehouse properties and logistics-services companies are fetching increased interest from funds as global trade grows. Brookfield Property Partners LP and TPG Capital have been on the acquisition path for such assets too.

Blackstone formed IndCor in 2010, acquiring property when values crashed after the global financial crisis. IndCor now has the largest portfolio of wholly owned warehouses and distribution centres in the US, operating in 29 key markets in 23 states.

“We built IndCor through 18 acquisitions to be one of the largest industrial real estate companies in the United States,” said IndCor CEO Tim Beaudin in Blackstone’s statement. “We are excited about the company’s future prospects under new long-term ownership with GIC.”

GIC declined to comment further on the deal, which is expected to close in the first quarter of next year.

The sovereign wealth fund has been very active recently in beefing up its global real-estate portfolio, which accounted for 7 per cent of its assets in its most recent annual report.

Just last month, it announced two investments in New Zealand. In the first, it partnered with the country’s Goodman Property Trust to co-invest in Auckland’s Viaduct Quarter; and, in the second, it agreed to buy a 49 per cent stake in five malls in the country from Scentre Group in a transaction valued at NZ$1.04 billion (S$1.07 billion).

In October, it announced that it bought the entire office component of Pacific Century Place Marunouchi – situated next to Tokyo Station – with a gross floor area of 38,840 sqm of net lettable area, for US$1.7 billion. It also acquired the remaining half of the RomaEst Shopping Centre in Italy, to gain full ownership of the mall, for an undisclosed amount; and it agreed to pay more than 200 million euros (S$325 million) for a 30 per cent stake in Spanish real estate firm Gmp.

The month before, it agreed with Indian developer Brigade Enterprises to jointly invest 15 billion rupees (S$317 million) in residential real estate projects in south India.

In January, it teamed up with New York-based developer Related Cos and the Abu Dhabi Investment Authority to buy Time Warner Inc’s headquarters in Manhattan for US$1.3 billion. And, the month before that, it acquired Blackstone’s 50 per cent stake in London’s Broadgate office complex for a reported £1.7 billion (S$3.5 billion).

Meanwhile, Blackstone has been stepping up its real-estate sales, as it prepares to raise its next global property fund. The private-equity giant has been reducing its stakes in its publicly listed entities, Brixmor Property Group Inc – the second-largest US shopping centre landlord – hotel group Hilton Worldwide Holdings Inc, and lodging company Extended Stay America Inc.

Blackstone has said it plans to raise at least as much as US$13.3 billion – the amount raised in its last fund – for its next fund.

Prices, rents of industrial space taper off

Prices and rentals of industrial space kept moderating in tandem with occupancy rates in the third quarter after a rise in supply of industrial land and space by the Government in recent years.

Tender prices for industrial government land sale sites targeting multiple-user developments have also declined, said state industrial landlord JTC yesterday.

Indicies for industrial space and multiple-user rental fell by 1.8 per cent and 2.2 per cent respectively, quarter on quarter.

Year on year, those two indices declined by 1.3 per cent and 2.3 per cent respectively.

This is the first year-on-year drop in rentals since early 2010, in contrast to the average increase of about 8 per cent a year over the past four years, said JTC.

Prices of industrial space also kept stabilising, with the industrial space and multiple-user factory space price indices falling by 0.9 per cent and 1.8 per cent respectively, quarter on quarter.

These falls reverse their respective gains of 0.7 per cent and 2.5 per cent in the previous quarter.

Colliers International director of research and advisory Chia Siew Chuin said the fall in multiple-user factory prices is not surprising, given the subdued state of strata-titled industrial property sales amid a price standoff between buyers and sellers.

Year on year, the industrial space and multiple-user factory space price indices rose by 0.2 per cent and 3.4 per cent respectively, significantly slower than their average rises of about 16 per cent per year over the past four years.

After a 0.9 percentage point decline in the second quarter, the occupancy rate of the overall industrial property market edged up by 0.2 percentage point quarter on quarter to 90.9 per cent in the third quarter.

This was on the back of a 1 per cent rise in demand, outstripping a 0.8 per cent increase in supply.

The better occupancy rate was driven by the warehouse segment, mainly due to the take-up of a few new single-user warehouses.

For multiple-user factory space, the occupancy rate fell by 0.5 percentage point to 86.8 per cent, the lowest level since late 2007, as a 1.5 per cent increase in supply outstripped the 1 per cent increase in demand.

Year on year, the occupancy rate of the overall industrial property market slid 1.8 percentage points to 90.9 per cent.

For multiple-user factories, the occupancy rate fell by 3.3 percentage points to 86.8 per cent.

Looking ahead, about 1.2 million sq m of industrial space, including 167,000 sq m of multiple- user factory space, is set to come onstream this quarter, bringing the full year supply of industrial space to 3.1 million sq m.

A further 2.6 million sq m and 1.9 million sq m of industrial space is tipped to come onstream in 2015 and 2016 respectively.

This is significantly higher than the average annual supply and demand of about 1.4 million sq m and 900,000 sq m respectively in the past three years, and is likely to exert further downward pressure on occupancy rates, JTC noted.

The Government will keep monitoring the industrial property market closely to ensure that the diverse needs of industrialists are met, it added.

“Appropriate measures will also be introduced where necessary to promote a stable and sustainable industrial property market.

“JTC will also continue to develop more specialised and innovative facilities with productivity- enabling features such as shared facilities and services, to support the growth of key industry clusters and catalyse new ones in the coming years.”

Ms Chia reckons sentiment is expected to remain mixed in the final quarter, given the uncertainties surrounding the global economic recovery.

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