Blackstone to Buy San Francisco Bay Area Assets as Part of its Massive $1.5B Deal

Holliday Fenoglio Fowler, Pacific Distribution Center, Keystone Corporation, WPT Capital Advisors, Central Valley, Holliday GP Corp,

Blackstone Real Estate Partners, LBA Realty, San Francisco, Bay Area, California State Teachers Retirement System, IndCor Properties

By Jon Peterson

New York City-based Blackstone Real Estate Partners will be adding to its exposure in the San Francisco Bay Area once it closes on the acquisition of a $1.5 billion deal with Los Angeles-based LBA Realty, according to sources with direct knowledge of the transaction.

[contextly_sidebar id=”hVkkFj6btcTpZW0182DsRjS2N6kWgbwW”]Blackstone declined to comment when contacted for the story. LBA also did not respond to phone calls and e-mails seeking comment for this article.

The portfolio that is in the process of being acquired totals 12 million square feet of logistics properties. The vast majority of them are located in California, which includes properties in both the San Francisco Bay Area and Los Angeles areas of the state.

The capital source that Blackstone is using for this transaction is a commingled fund that it manages that employs a core plus investment strategy. The one fund that has this strategy is Blackstone Property Partners. The committed capital for this fund stood at $10.3 billion, through the end of 2015.

One of the largest investors in Blackstone Property Partners was the California State Teachers Retirement System. It had made a $500 million commitment into this commingled fund. A core plus investment strategy typically means buying existing properties that have strong current income and have a chance to increase in value in the future through an expansion or renovation possibility.

The planned investment by Blackstone will mean that the manager has moved back into owning logistics assets. The company had exited this property type last year when it sold IndCor Properties to the Government of Singapore Investment Corporation for $8.1 billion.

LBA has a significant portfolio of industrial properties in the San Francisco Bay Area. It recently added to its portfolio in the region with a $16.75 million acquisition of the 90,544 square foot 1250 Elko Drive industrial/manufacturing building in Sunnyvale, according to a source familiar with the transaction. This property was sold by the trustees of the Eugene Rocky Trust partnering with the property manager, Woodmont Properties. The listing agent for the seller was CBRE led by Scott Prosser, Joe Moriarty, Tyler Meyerdirk, Jack DePuy, Brad Zampa, Mike Walker and Brian Matteoni.

According to the company’s Web site, LBA has a portfolio of 28 industrial assets in Northern California. This includes properties in Fremont, South/North San Jose, San Leandro, Hayward, Santa Clara, Union City, Milpitas and Oakland. This investor owns and manages a portfolio of totaling 20 million square feet. Its main markets are Los Angeles, Oakland, San Francisco, San Diego and Seattle.

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