Blackstone strikes first Brazilian industrial RE deal

The New York-based private equity and real estate giant’s portfolio purchase from BR Properties follows Brookfield’s failed takeover bid of the company.

The Blackstone Group has agreed to buy 10 real estate assets from BR Properties, one of the largest commercial property companies in Brazil, for R$1.07 billion (€275.8 million, $301.28 million). The deal, which was made on behalf of Blackstone’s global opportunistic real estate fund, Blackstone Real Estate Partners VII, is expected to close in the next three to four weeks. Although Blackstone already has begun investing BREP VIII, the firm originally had identified the deal for BREP VII, which is now fully committed.

The transaction marks Blackstone’s entry into the Brazilian industrial real estate market. The assets being acquired include both warehouses and logistics properties as well as office buildings, primarily in the state of São Paulo. BR Properties sold 34 warehouse and logistics assets – the vast majority of its industrial holdings – to Global Logistic Properties for $1.36 billion in March 2014. However, BR Properties still holds six industrial properties in the state of São Paulo, one in the state of Pernambuco and one in the federal district, according to its website.

“Generally, we like the industrial space across the world and see this as an opportunity to enter the space in a new market,” said a Blackstone spokeswoman. “We have historically had success elsewhere in the world developing operating platforms around the assets we acquire and may look to do the same here.”

The deal follows the collapse last month of Brookfield Asset Management and Brazilian investment bank BTG Pactual’s bid to take BR Properties private. Brookfield and BTG launched a tender offer for the company’s shares in February but BR Properties disclosed last month that the transaction would not proceed because the buyers failed to fulfill certain conditions within a specified deadline. BR Properties’ overall real estate portfolio includes 39 office, eight industrial and three retail properties in the states of São Paulo, Rio de Janeiro, Minas Gerais, Rio Grande do Sul, Pernambuco and the federal district.

The acquisition represents Blackstone’s fourth asset-level real estate investment in Brazil, with the first being the purchase of assets from Bank of America Merrill Lynch’s property business in 2011. The firm also has closed on two deals in partnership with Pátria Investimentos, a Brazilian fund manager in which it acquired a 40 percent stake in 2010: the purchase of a 70 percent stake in Brazilian homebuilder Gafisa’s Alphaville unit for R$1.4 billion in December 2013, and the acquisition of four office buildings in Rio de Janeiro from Brazilian fund manager Opportunity for R$700 million last December. Blackstone, however, did not partner with Pátria on the BR Properties transaction.