Blackstone has amassed an €8b portfolio of warehouses and dark kitchens in Europe, as the world’s biggest real estate investor bets that ecommerce and delivery services will play an increasingly big role in the region’s economy.
The private equity group said on Tuesday that it had created a separate company, Mileway, to hold the properties in a move seen as a precursor to selling or listing it in about two years.
Mileway now has the largest portfolio in Europe of so-called “last mile” properties, which are used by the likes of Amazon and also house dark kitchens that food delivery services such as Deliveroo rely on.
The European wager echoes one Blackstone has made in the US, where it struck a record $18.7bn deal to buy a swath of urban warehouses portfolio owned by Singapore’s GLP. The buyout firm reckons that the level of ecommerce and food delivery in Europe will approach levels in the US and Asian countries such as China and South Korea.
James Seppala, head of Blackstone Real Estate for Europe, said: “Mileway is a natural evolution of our European logistics strategy, which is one of our highest conviction, long-term investment themes.”
Creating a separate company to hold the real estate treads a familiar path for Blackstone. Two years ago the buyout group did the same with Logicor, which focused on out-of-town warehouses, and was sold for €12.25bn.
Blackstone’s acquisition spree has been led by its opportunistic European property fund, which has pieced together the Mileway assets from Europe’s fragmented warehouse property sector.
Friday, 20 September, 2019
It has combined small purchases with big acquisitions such as €1.3bn of Dutch and German properties bought from London-listed Hansteen two years ago. It holds a patchwork of 1,000 smaller properties across Europe, including Germany, France, Spain and the Netherlands, and employs about 150 people.
Mileway will continue to buy more properties whose fortunes are tied to the growth of ecommerce. The company will be led by Emmanuel Van der Stichele, former fund director of the €3.5bn Goodman European Logistics Fund, who has been appointed chief executive. This means that by the time Blackstone exits the investment, Mileway’s size may rival that of Logicor.
Urbanisation has also helped lift the value of “last mile” properties, as shortages of other forms of real estate in large cities, such as housing, mean some warehouses are being converted to housing.
E-commerce is more developed in the UK, where internet sales now account for a fifth of all retail sales, than elsewhere in continental Europe. This has prompted companies such as London-listed Segro, which has a market capitalisation of £8.6bn, to push further into urban logistics.
Elsewhere in Europe, countries such as France, the Netherlands and Germany, with ecommerce penetration rates above 15 per cent, are far above the European average of 8.8 per cent, according to Savills.
The “dark kitchens” business has also attracted entrepreneurs such as Travis Kalanick, the former Uber chief executive, whose company City Storage Systems has been acquiring real estate in the US and UK where meals are prepared for delivery through apps such as Deliveroo, Uber Eats and DoorDash.