One of investment’s biggest players has agreed to an aggressive deal, allowing it greater access to warehousing in the European market.
Blackstone, the investment management company, has purchased 80 percent of Burstone Group’s Pan-European Logistics (PEL) platform, the companies announced Monday. The real estate investment trust will hold onto a 20 percent stake in the portfolio, which it started building in 2017.
According to Burstone Group, the portfolio is worth nearly 1.1 billion euro ($1.2 billion) and includes “32 high-quality mid-size and big-box logistics properties” throughout seven countries. The majority of the facilities are in France, Germany and the Netherlands. According to Burstone, the facilities, which collectively account for about 1.2 million square miles of space, are 97 percent occupied and support over 110 tenants, the majority of which are third-party logistics companies.
James Seppala, head of European real estate for Blackstone, said the firm continues to seek out opportunities to invest in logistics-based projects.
“Logistics is one of our highest conviction investment themes globally. This exceptionally well-located portfolio of assets in core logistics markets across Europe is additive to our existing portfolio and allows us to continue to capitalize on customer demand, including as a result of growing e-commerce penetration trends across the continent,” Seppala said in a statement.
Blackstone has previously made other logistics-based investments. In 2019, the firm purchased U.S. Logistics Assets for $18.7 billion from three funds managed by GLP, another investment manager. In 2022, it recapitalized its European last-mile logistics company Mileway for nearly $24 billion, banking on the rise of quick-turnaround delivery.
Over the course of at least the past five years, Blackstone executives have made public statements emphasizing the importance of the sector to the company’s further growth and profitability, often citing the growth of e-commerce as an indicator that logistics demand will only continue to surge.
But as other funds work to invest in logistics, some find the industry has more curveballs than first meet the eye. Earlier this year, U.S. Logistics Solutions (USLS)—formerly Forward Air—shuttered without warning; the company was owned by finance firm Ten Oaks Group after being acquired in 2021.
At the time of the closure, Ten Oaks said, “The ongoing turbulence in the trucking and logistics industry proved insurmountable.”
The bankruptcies and headwinds companies like Yellow Corp. and Convoy have faced provide a picture of a challenging landscape ahead for many freight movers. Geopolitical conflicts influencing maritime trade routes like the Red Sea and labor disputes causing a threat to ports peppering the East Coast of the U.S. also paint an uncertain picture.
But despite the chaos and tumult, it seems Blackstone has decided to continue its pursuit of logistics, with a particular focus on warehousing. That such an influential player isn’t backing off of a troubled industry could be a sign of a reset.
The emphasis on Blackstone coming into European facilities could also be a signal that the company is looking to establish a presence in the EU leading up to potential changes to trade, tariffs and taxes in the bloc.
As Chinese shopping apps like Shein and Temu continue to take market share from brands and retailers operating in the EU, regulators have been discussing changing—or closing—de minimis thresholds. Those provisions allow goods valued less than a specific amount to enter countries with less scrutiny and lower costs. Making material changes to those thresholds could cause the China-direct model the fast-fashion companies embrace so tightly to become less advantageous from a cost perspective.
Europe isn’t the only geography where de minimis has come under scrutiny; some legislators in the U.S. have proposed decreasing or eliminating the so-called loophole, taking specific aim at companies like Shein, Temu and AliExpress. Both Shein and Temu have already begun setting up warehouse spaces and logistics partnerships inside the U.S. as that potential looms.
In some jurisdictions, changes to de minimis are more than just talk.
Already, Turkey has lowered its de minimis threshold and doubled the tax on goods coming from outside the EU. If other companies follow suit, European warehouse space may become a boon to property holders as companies scramble to avoid high tariffs and taxes.
Regardless of Blackstone’s strategy for a deeper foray into logistics, Burstone Group certainly isn’t balking at the influx of cash and a powerful new partner.
Andrew Wooler, CEO of Burstone Group, said the deal marks an important partnership for the trust, which will continue helping manage the assets in the PEL portfolio even after the transaction is complete.
“We have indicated for a while that we have been seeking strategic partnerships in Europe, and we are delighted to partner with Blackstone. This partnership deepens our already strong relationship with Blackstone’s operational and management team, who know our European team well from previous successful collaborations. Partnering with such a best-in-class international business unlocks exciting opportunities for the platform, enhancing scalability and driving the growth potential of the Group’s fund and investment management business,” Wooler said in a statement.
