REIT giant Tritax acquires Blackstone's UK warehouse assets for £1 billion, with part of the consideration paid in 9% equity

According to Zhitong Finance APP, Blackstone (BX.US) has agreed to sell its UK warehouse asset portfolio valued at £1 billion (approximately $1.3 billion) to Tritax Big Box Real Estate Investment Trust. This transaction will allow the alternative asset management company to acquire a partial equity stake in the owner. According to a statement released on Monday, Tritax will pay £632 million in cash (funded by a £650 million loan) and issue £375 million worth of new shares to Blackstone Group, which will give the New York-based Blackstone approximately 9% equity. Tritax will issue shares to Blackstone Group at a price of 161 pence per share, representing a 13.5% premium over its closing price last Friday, but below the reported EPRA net asset value of 188.17 pence per share for the six-month period ending in June. Blackstone has been a significant buyer of warehouse assets in the UK and Europe, betting on the rise of e-commerce and strong warehouse demand supported by recent supply chain restructuring. The company has accumulated a large asset portfolio through its Indurent platform (which was primarily formed by the acquisition of two previously listed companies) and continues to make acquisitions through its funds. The UK real estate investment trust market is thinly traded, with share prices consistently below reported asset values, providing Blackstone with a stable source of transactions, having recently acquired Warehouse REIT. However, this also means that the attractiveness of options for asset disposal in the public market is low, especially as the real estate industry faces the end of the zero-interest era and rare large private sales. James Separa, Chairman of Blackstone Europe, stated: "Our decision to hold equity in Tritax Big Box REIT in this transaction reflects our confidence in the company's long-term strategy and prospects." This transaction will increase Tritax's loan-to-value ratio (a measure of its relative debt level) from the previous 31% to 35%. In addition to the previously stated guidance to reduce this ratio to its target range of 30%-35%, the company plans to sell approximately £300 million of assets over the next 18 months