Blackstone in 'Largest Ever' Private Real Estate Transaction

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17 February 2022

Blackstone has recapitalised its logistics business in a €21 billion deal.

Investors of Mileway, the European logistics arm of Blackstone, will be offered the opportunity to retain or increase their shareholding, or exit for cash.

According to Blackstone’s statement, the majority of capital for the recapitalisation is coming from existing investors.

The recapitalisation remains subject to a “go-shop” process led by Morgan Stanley, in the event that a higher bidder comes in externally.

What is Recapitalisation?

In the simplest terms, recapitalisation is a process where a company’s debt and equity is restructured to either stabilise a company’s financial situation or as a strategy to protect share prices.

There are also several other reasons for recapitalisation, such as preventing a hostile takeover from an outside company or as part of the bankruptcy process.

The process usually involves exchanges of forms of finance. In the case of Blackstone and Mileway, new investors will buy into Mileway, whilst existing shareholders will either keep or increase their shares, or sell out for cash.

Industrial and Warehouse Space Booming

Market analysis shows that in 2021, much of the UK’s commercial property sector was riven by the industrial property sector - factories, warehouses, distribution units, - with the number of transactions increasing from 699 in 2020 to 892 in 2021, a rise of 28 per cent. 

Thanks to a rise in online shopping during and post-pandemic, and the resulting need for additional industrial storage, warehouse space is now a “central plank of many real estate investors’ strategies for the first time,” according to the Financial Times.

Comments from Blackstone and Mileway both indicate this. James Seppala, Head of Real Estate Europe, Blackstone, said: Logistics is one of our highest conviction themes globally and the sector continues to prove its resiliency and strong growth potential.”

Picture: a photograph of a warehouse. Industrial shelving can be seen in the background, as can several members of staff in uniform. Image Credit: Unsplash

Article written by Ella Tansley | Published 17 February 2022

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