China Investment Corporation is in pole position to buy Blackstone’s European logistics business Logicor for more than €12bn (£10.5bn).
The Chinese sovereign wealth fund is set to buy the 630-asset platform in what will become the largest European real estate deal.
CIC has moved ahead of rivals for Logicor, Mapletree Investments with Temasek Holdings and Global Logistic Properties and a deal with Blackstone for the 146.4m sq ft of warehouse property is scheduled to be signed in the next two or three days.
Because of the complexity of the deal, which involves hundreds of special purpose vehicles, funded by a variety of Blackstone funds across 17 jurisdictions, issues relating to tax liabilities, structuring and subsequently price still need to be ironed out and agreed.
Blackstone and advisor Eastdil Secured have been pushing the sales process ahead aggressively over the past few weeks building strong competitive tension with formal bids submitted on 25 May.
CIC already has a close working relationship with Blackstone and is a major investor into its funds, which has been seen as an advantage by sources close to the process.
Temasek and Mapletree, investment companies of the Singaporean government, are still interested in Logicor and are willing and able to undertake the transaction should a deal with CIC falter.
GLP submitted a bid for Logicor but uncertainty over its own corporate future is understood to have hampered its ambitions. The largest owner of logistics properties in Asia is in the midst of a strategic review that may see the company sold.
The disposal of Logicor has been run as a dual track process but a prospective IPO was ruled out due to the strong competition amongst the parties and the subsequent price it was possible for Blackstone to achieve through a trade sale. A trade sale also allows Blackstone to exit Logicor in one fell swoop, whereas with an IPO it would have had to retain a minority stake over the longer term whilst there would also have been greater execution risk given the volatile nature of the capital markets.
In buying Logicor CIC will be able to take advantage of the relatively high yields the sector generates compared to other asset classes and the business is positioned to take advantage of structural changes in online retailing and distribution.
Blackstone established Logicor only five years ago and since then it has become the second largest owner of logistics property in Europe. During this time, pricing for the sector has soared and yields have come in dramatically.
Cushman & Wakefield and KPMG are advising CIC. JLL and EY are advising Mapletree and Temasek. CBRE is advising GLP. Eastdil Secured is advising Blackstone on the trade sale; Goldman Sachs, Bank of America Merrill Lynch, Citi and Morgan Stanley were advising on the prospective IPO while PwC and Deloitte have also been involved in administering the disposal.