Monday, December 21, 2020

Global Investor KKR Makes Entry Into Major East Coast Logistics Market Lehigh Valley

 International investment firm KKR made its entry into Pennsylvania’s Lehigh Valley market with its acquisition of a distribution warehouse that opened last year and is leased to one of the nation’s largest logistics and trucking companies.

The New York-based firm bought the 600,238-square-foot property at 30 Ludwig Court in Shoemakersville, Pennsylvania, from developer The Keith Corporation, according to CoStar research and a statement from KKR.

The price was not disclosed. The average sale price of industrial properties in the Lehigh Valley area is $85 per square foot, according to CoStar. At that rate, the property would be valued at $51 million.

Ryder Integrated Logistics, a division of Miami-based logistics and trucking company Ryder, occupies the entire property, according to CoStar research. Ryder operates more than 300 warehouses spanning 55 million square feet across the nation, according to its website.

This is KKR’s first industrial purchase in Pennsylvania’s sprawling Lehigh Valley, which is the state's third-largest metropolitan area and has 132 million square feet of industrial space.

The property sits roughly 70 miles northwest of Philadelphia and 120 miles from New York City. The Lehigh Valley's proximity to those cities as well as Boston has helped to establish the area as a significant East Coast logistics market.

“Some of the biggest names in logistics occupy millions of square feet here."

In the past 10 years, Walmart, Amazon, Kellogg’s and Nestle have all signed industrial leases for more than 1 million square feet in the area, according to CoStar research.

Dow Chemical Site to Become Distribution Campus in East Philadelphia

 Industrial developer DH Property Holdings plans to build a sprawling last-mile distribution campus on the site of a former chemical plant in Philadelphia.

The company and its capital partner acquired a 69-acre parcel of land at 5000 Richmond St. that once housed a chemical refinery owned by Dow Inc., according to CoStar research and a statement from commercial real estate financing firm Walker & Dunlop. It plans to develop a 733,800-square-foot distribution campus on the land.

The land acquisition and development represent a capitalization of more than $115 million, according to the statement.

The Rohm and Haas Philadelphia Plant operated on the site from 1920 until 2011, according to the Environmental Protection Agency.

Rohm and Haas, a chemical manufacturer, was acquired by Dow in 2009, after which Dow assumed control of the plant until its closure. The plant was demolished in 2011, and Dow listed it for sale this year.

A construction timeline was not disclosed. The distribution center is planned in Northeast Philadelphia, where logistics properties account for approximately 10.5 million of the area’s 13.9 million square feet of space.

The region has also maintained a tight vacancy rate of 4.5%.

There is also no new industrial product underway in the area, which could allow the new development to capture some of the steady demand that remains in the Northeast.

King of Prussia flex building trades for more than $9M

by  Natalie Kostelni Reporter Philadelphia Business Journal

Velocity Venture Partners has paid $9.3 million for 780 Fifth Ave., a 97,000-square-foot flex building in King of Prussia.

The acquisition is one of a series that Velocity has made this year as it spent $150 million to double its industrial holdings in Pennsylvania and New Jersey. The company bought 2 million square feet across 21 buildings and now owns a portfolio totaling 4 million square feet.

Among its acquisitions this year was 771 Fifth Ave., a 30,300-square-foot building next door to its latest acquisition; a 667,019-square-foot industrial building at 2750 Morris Road in the Lansdale area; and several buildings in Pennsauken, New Jersey, including a 37,856-square-foot warehouse facility located at 2301 Haddonfield Road.

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Wednesday, December 16, 2020

Scranton's Industrial Market Holds on Strong Through 2020

 With just a few weeks left in the year, it appears increasingly likely that Scranton will be crowned the 2020 Queen of Pennsylvania logistics.

Her ascension to the throne is somewhat surprising. There were some troublesome signs within the market at the onset of the pandemic. And for years, Northeast Pennsylvania has played second fiddle to Lehigh Valley, which offers better access to New York and Philadelphia.

But CoStar data shows industrial net absorption, the difference between move-ins and move-outs, in Scranton totaled nearly 4 million square feet over the past 12 months, more than every other market contained within the North Atlantic trade corridor.

This region runs from Scranton down to Hagerstown, Maryland, and over the past decade, nearly every serious player in e-commerce has moved into at least one of its small markets. That’s because from them, every major city along the northeastern coast can be reached within hours.

Even with this strong demand, it appeared Scranton was possibly in for some short-term pain the second quarter.

No one had a clue how leasing any commercial property type would function at the onset of the pandemic, and Scranton had millions of square feet of speculative industrial space nearing completion. There was also a concentration of tenants that appeared to be at risk of downsizing within the market.

This could've compounded the disruption the new supply would create, and with a surplus of projects set to come online in nearby Lehigh Valley, the competition for new tenants looked like it would be fierce.

Instead, local demand spiked.

The exposed tenants have not downsized their local presence, and most of Scranton’s industrial tenants remain in place. Additionally, major leases were signed by Geodis, Kane Logistics and Lowe's. Even with millions of square feet in speculative space arriving, the market's overhead vacancies actually trended down over the second half of the year.

"The Greater Scranton industrial market is not only surviving the pandemic, but thriving in it," said Jim Cummings, vice president of marketing for Mericle Commercial Real Estate Services, the market's largest developer of logistics space. "We traditionally compete against northern and central New Jersey and other parts of eastern Pennsylvania, but those areas are becoming overdeveloped and expensive. Right now, we have the right combination of interstate access, tax incentives and workforce.'

This bodes well for Scranton’s future. There's still about 2.5 million square feet of logistics space under construction; much of it is speculative. Given the market easily filled this amount of space throughout this turbulent year, it looks likely that demand will keep up with the new supply through 2021.

"The key for us going forward is whether we'll be able to find enough developable land in this market to keep up with demand," Cummings said. "Our mountainous terrain and past industrial history mean we don’t have a lot of available flat land with utilities near our interstates. We often have to take sites most other developers would pass up and find creative ways to shape them into viable business parks."

Experience with creative development might be a plus in the near future as developers look to rapidly adapt to the e-commerce boom. Empty shopping malls, vacated department stores and even repurposed mines are being sought after across the state for redevelopment and expansion.

There are more than a few high-vacancy shopping malls in Scranton and quite a bit of empty shopping centers, too. It probably won't come to this, but there's plenty of abandoned coal mines here as well.

Scranton's reign might be brief; there’s a lot of space in Lehigh that could lease any day. Regardless, her future looks quite promising.

Tuesday, December 15, 2020

Top 10 CRE Investment Predictions for 2021

 By Joseph J. Ori

By all accounts, 2020 was a shocker. Predictions made at the beginning of the year were, by mid-March, hardly worth the paper or electronic screen they were written on. With a vaccine for Covid-19 now beginning to be distributed, hopes are high that 2021 will be easier to navigate. As such, following a ten predictions for what CRE’s investment landscape will look like.

Long Term Interest Rates Will Continue to Increase 

The 10-Year T-Note which is up from .49% in March 2020 and is currently at .97% will continue to increase due to the booming economy, deferred consumer demand from the pandemic, low unemployment, and higher inflation expectations. Higher inflation expectations will cause the 10-Year Treasury Note yield to rise to 2.0% by mid-2021.

REIT Returns Will Accelerate

REIT returns for 2020 as measured by the FTSE-NAREIT All Equity Index will most likely be down about -8.0% from 2019 when the index was up 28.66%. Due to the receding pandemic, vaccinations and Covid fatigue, the CRE markets will continue to stabilize and REITs will benefit. I expect the FTSE-NAREIT All Equity Index to increase 8% in 2021 with 3.5% from the dividend and 4.5% from capital gain. Some REIT sectors like hotels and malls will still be distressed, however, this is where there will be significant investment opportunities.

CRE Investment Returns Will Rise

The CRE industry which has suffered dramatically during the pandemic in 2020, is set for a major turnaround in all property sectors. The pandemic caused almost all sectors to suffer nonpayment and forbearance of rent, lease defaults, historic low occupancy, loan defaults and foreclosures. However, there is over $200 billion in real estate equity capital on the sidelines and much of this capital will be put to work in 2021 in all property types. There are also many discounted CRE assets that are ripe for investment including hotels, malls, office buildings and urban apartments.

Apartment Rent Control Will Continue to Spread in the US

New rent control laws were enacted in Oregon, California, and New York in 2019 and will spread to other states in 2021 and beyond. Look for Illinois, New Jersey, Minnesota, Virginia, Massachusetts, Maryland, and other states to adopt new and disastrous rent control laws in the next few years. The apartment market across the country will become bifurcated with Class A tier red states without rent control and pro-real estate policies and the B tier blue states with rent control and anti-real estate policies. Cap rates will rise 1.0%-1.5% in the B tier states due to the negative effects of rent control.

Consolidation in the CRE Service Sector Will Continue

The CRE service sector has four subsectors, brokerage, software, data analytics and apartment listing services. All of these four sectors have been consolidating over the last 10 years to gain scale, provide services on a global basis, diversify the service offering, acquire new clients and customers, and increase revenue, profits, and cash flow. The six largest CRE brokers (CBRE, JLL, Cushman, Colliers, Newmark, and Marcus & Millichap) are all public today and look for one or two of these firms to merge with a larger player. The software sector, which is controlled by the big four of, Yardi, MRI, Skyline and RealPage will see more consolidation as the larger and well-capitalized firms gobble up their smaller and weaker competitors. The same consolidation will occur with the data analytics firms and look for the large software firms to be key buyers of the larger data analytic firms.

Overall Cap Rates for CRE Will Increase 

Cap rates for all CRE properties will increase .5% to 1.0%+ due to higher interest rates, the outmigration of residents and investment in blue cities and the large number of distressed assets. The only property sector that may not see an expansion of cap rates is the vaunted industrial market, which has seen cap rates compress about 2.0% from 2015.

The Shadow Lenders Will Take More Market Share from Regulated Lenders

The shadow lending market in the U.S. consists of CRE lenders that are unregulated and include mortgage REITs, private loan funds, private debt funds, hard money lenders and large mortgage bankers. The shadow lending market which typically provides short-term, bridge, permanent, mezzanine and high yield construction loans will increase its market share from approximately 10% of total loans to 15% of total CRE loans. The total volume of new loans originated in 2019 was approximately $500 billion with the shadow lending market accounting for approximately $50 billion of that total.

New CRE Loan and Transaction Activity will be Strong in 2021 

In 2019, approximately $500 billion in new loans were originated and overall transaction volume was $750 billion. Although these were very healthy metrics, they were down about 10.0% from the record activity in 2018. The pandemic has significantly reduced this activity in 2020 with the volumes down about 50%. I predict that the 2021 amounts for both loans and transactions will rise significantly and be close to the levels reached in 2019. This is welcome news for the real estate brokerage industry as exemplified by the stock prices of the six public real estate brokers, which are at or near record highs.

CRE Investment will Continue to Decline in Urban Blue Cities

The historic out-migration of residents and businesses from urban blue cities like, San Francisco, New York, Minneapolis, Seattle, Portland, Chicago, Los Angeles, and others will continue. This generational demographic shift has caused high apartment, office and retail vacancies, closures of many retail outlets and less demand for single-family homes and condominiums. CRE investment capital will decline significantly in these cities and will be refocused on suburban areas around these cities and red states.

The Ugly Ducklings of CRE Investment will Shine

The ugly ducklings of CRE investment, malls and hotels will be the favored investment sectors due to large discounts in value, the receding pandemic, and a growing economy. Many CRE investment firms are having a difficult time acquiring industrial, manufactured housing, suburban office and apartments and fully leased food store/drugstore shopping centers at acceptable cap rates. This will cause a flood of new private equity capital into these two distressed sectors and institutional capital into retail and hotel opportunity and distressed investments.

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Monday, December 14, 2020

Trammell Crow Breaks Ground on Two-Building Industrial Park in Aston, PA

 Trammell Crow Co.'s Northeast Metro Business Unit has broke ground on Springbrooke Trade Center, a two-building industrial park about 22 miles southwest of Center City Philadelphia in Aston, Pennsylvania.

Springbrooke Trade Center is set to include a 210,400-square-foot building at 300 Springbrooke Blvd. and a 273,600-square-foot building at 500 Springbrooke Blvd. Both facilities are set to include a 36-foot clear height, 7-inch concrete floor slabs, LED high-bay motion sensor lighting, truck queuing lanes and segregated car and truck areas. Each building can also be fully secured without limiting access to the other and are divisible.

The industrial development sits on a 36-acre site about a mile from Interstate 95 and 12 miles from the Philadelphia International Airport.

Springbrooke Trade Center is set to be completed by the third quarter of 2021.

Conewago Enterprises Inc. is the general contractor for the project. KSS Architects is serving as the architect of record and Bohler Engineering is the project’s civil engineer.

Thursday, December 10, 2020

Maxon Auto Subleases Industrial Facility in Pennsauken, NJ

Maxon Auto Corp. has subleased an industrial building at 500 Griffith Morgan Road in Pennsauken, New Jersey.

The subtenant, a growing performance auto parts firm, is going to occupy the entire 140,800-square-foot industrial property in the second quarter of 2021. The facility includes a 24-foot clear height, 29 loading docks and three drive-in doors.

Mistfits, a subscription box service, moved to a new build-to-suit facility in Delanco a few months ago. As a result, Misfits needed to find a new tenant to fulfill its existing lease at the Griffith Morgan Road facility.

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Wednesday, December 9, 2020

Forward Air Corporation Lease 37,000Sf in Lehigh Valley

 A leading asset-light freight and logistics company based in Tennessee has chosen the Lehigh Valley as the location for its newest facility serving the East Coast.

Forward Air Corporation will be leasing 37,718 square feet of space in the Lehigh Valley Industrial Park VII in Bethlehem, a project that will create new jobs for the region in the areas of office and sales personnel, dock workers, and independent contractors.

The company chose Lehigh Valley for based upon the region’s significant economic growth in recent years, as well as Forward’s prior success with its less-than-truckload (LTL) business in the area using a local partner.

“The Lehigh Valley area is highly attractive for us,” said Tom Schmitt, Chairman, President & CEO of Forward Air Corporation. “With manufacturing on the rise and a very capable workforce, we see a tremendous opportunity to grow with the region.”

Construction is expected to be completed next month, with the facility up and running in March or April.

“It’s a pleasure to welcome Forward Air to the Lehigh Valley,” said Don Cunningham, President & CEO of the Lehigh Valley Economic Development Corporation (LVEDC).

“Forward is a large national company with more than 5,000 employees and a significant role in America’s supply chain,” Cunningham said. “As a major manufacturing center, the Lehigh Valley needs companies like Forward Air to continue its economic growth. We are grateful to all the stakeholders like developer J.G. Petrucci that helped to make this project happen.”

Schmitt said the new Lehigh Valley location at 2675 Commerce Center Blvd. signals Forward’s growth trajectory into cities that are not adjacent to major airports.

“Job growth should always be applauded, but especially so in these turbulent times,” said Northampton County Executive Lamont McClure. “This announcement of Forward Air Corporation’s is timely and the location in Bethlehem is the right fit for the nature of the work they’ll be doing there.”

The project will significantly improve freight options for Lehigh Valley businesses thanks to Forward’s nationwide network covering 98% of the U.S. population, and its portfolio of premium freight management services, Schmitt said.

“Forward’s expansion into Bethlehem is a benefit to Lehigh Valley companies of all sizes who use trucking services to get their products in the hands of consumers,” said Bethlehem Mayor Robert J. Donchez. “I welcome Forward to the city of Bethlehem and look forward to working with them in the years to come.”

Forward’s Bethlehem facility will bring local sales and operational support, allowing the company to better serve customers by offering customized transportation solutions through a consultative approach, Schmitt said.

Headquartered in Greeneville, Tenn., Forward operates approximately 200 facilities across the country and employs more than 5,200 people nationwide. The company provides LTL, final mile, truckload, intermodal drayage, and pool distribution services across the United States and in Canada.

Forward is the second company to find a new home in LVIP VII this year. EcoTech Marine, a Bethlehem-based designer and manufacturer of high-quality aquarium equipment, announced in March that it will lease 88,007 square-feet there.

Flight to Quality for Office Tenants Touring Now-Affordable Trophy Space

By Les Shaver

Even though Class A office space is now generally more available than pre-crisis and at more affordable rates, the share of tours in premium spaces has remained remarkably stable at 62% of all tours in each period. 

Except for one city, that is—New York. 

There, during the recovery months of June through October, tours of Trophy or Class A share rose to nearly 70% of all tours. In the pre-crisis months of January, February, and early March, with fewer options to choose from, a little over half (55%) of tours in New York were for Trophy or Class A office spaces.

This is one of the findings of VTS’ new office demand index, or VODI, which was designed to provide visibility into real-time tenant demand in the US office leasing market by capturing tenant tours.

For all cities, there have been some commonalities:  Activity in the typical peak months of spring was lost to the COVID-19 crisis, for starters. Then, after posting positive growth during the summer months, the threat of rising COVID-19 cases eliminated the October bump in almost all markets. 

But, it noted, while US markets share similar timing, the size of the demand shock and pace of recovery has varied significantly. In New York City, that has translated into a flight for quality that is now affordable for many tenants.

Other cities have different stories to tell.

When COVID hit, New York, along with San Francisco, suffered the most contraction, according to VTS. Both cities lost more than 90% of their office space demand between mid-March and spring. But major markets suffered across the board. Boston and Washington, DC, for example, were the least affected markets but still dropped 71 and 75%, respectively.

Los Angeles was among the leading markets in recovering, gaining three-quarters of the demand lost after stay-at-home orders were issued in March 2020. Los Angeles’ 41 index point quarter-over-quarter growth was followed by 24 and 22 index point gains in Seattle and Washington, respectively.

The city’s 12 index point growth in October was slower than its 18-point September gain. Washington, like LA, saw slower growth in October. Seattle, however, fell 2 points over October.

While steady government demand historically boosts Washington, Seattle’s recovery indicates that the tech industry may not be embracing remote work as much as some observers think, according to VTS. However, it notes that the recovery has been broad-based across industries.

In New York, which was hardest hit initially by COVID, tenant demand jumped 9 points in June and 14 points in July to a VODI of 31. Other markets didn’t match this pace until September. The city’s recovery slowed afterward and fell five-point in October.

Boston experienced one of the smallest VODI declines from February levels and has seen little growth in demand after making progress in May and June. San Francisco, the hardest-hit market, faced issues coming into the pandemic and has seen a nine-point increase since hitting bottom.

“Where industry experts look to Seattle as a hopeful harbinger of tech’s future office space use, San Francisco—with its exposure to more speculative leasing demand fueled by venture capital funding—is the only market where tech has yet to renew interest in more office space,” according to VRS.

Tuesday, December 8, 2020

TJ Maxx Parent Company Inks Lease for Build-to-Suit Distribution Facility in Northeast Philadelphia

 TJX, the parent company of retailers T.J. Maxx, Marshalls and Home Goods, has signed a lease for a build-to-suit distribution facility in northeast Philadelphia.

TJX is set to occupy an entire 282,800-square-foot facility that will be located on 21 acres at 9801 Blue Grass Road. The Blue Grass property is owned by DH Property Holdings and Bridge Development is serving as the developer for the project.

The existing building at 9801 Blue Grass Road was originally constructed in the 1950s and owned by Horn & Hardarts. At the time, it was the largest commercial bakery in the United States and was built to produce the company's own line of baked goods for sale in its chain of so-called automat stores in New York and Philadelphia.

The building was later used by Hostess Bakery to produce Twinkies until 2012. Since then, it has been leased to a variety of local warehousing and distribution companies.

Another Intriguing Development Unfolds in Reading's Industrial Market

 by By Ben Atwood CoStar Analytics

In an expensive indication of trust in the market’s dormant strength, three major Reading, Pennsylvania, industrial properties were acquired this past week by large outside investors as part of a nationwide portfolio deal involving properties owned by the Hillwood Group.

The buyers, Stock Bridge Capital and the National Pension Service of Korea, spent close to $2 billion on 23 properties totaling nearly 14.3 million square feet of warehouse and distribution space across the United States. This ranks as the third-largest industrial property sale of 2020 by value and the largest in the country since the onset of the pandemic in March

The joint venture now owns all the properties at the Hamburg Logistics Park, a 163-acre development a few miles north of Reading proper and 3 miles south of Interstate 78. These facilities are about 15 miles east of the I-78/I-476 interchange in Lehigh Valley, which allows truckers access to every major market on the northeastern shore and has made Lehigh County the epicenter of Pennsylvania logistics.

What is interesting about Reading and this sale is the market’s overhead numbers should not inspire much confidence. While leasing activity has ticked up in 2020, there’s been a surplus of construction activity within the market over the past few years.

Vacancies were well into the teens at the start of the year, and CoStar data shows 325,000 square feet, or slightly more than 15%, of the Reading industrial properties Stock Bridge Capital and the National Pension Service of Korea acquired are currently vacant.

But things might be changing. By the end of the year, Reading will have absorbed over 3.1 million square feet of industrial space, the highest figures in decades. This uptick in demand is likely due to the coronavirus spiking e-commerce levels, which has led to a surge in demand for industrial space.

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Friday, December 4, 2020

Two Vineland, New Jersey, Apartment Complexes Sell for $15 Million

 Two garden-apartment complexes in South Jersey have traded for $15.1 million, the largest multifamily transaction in Vineland and Cumberland County since 2015, according to CoStar data.

The complexes have 152 total units and are located about a half-mile apart.

Regency Court is a two-story garden-apartment complex with a brick-and-siding exterior and 104-units on 4.5 acres. The property includes 72 one-bedroom units and 32 two-bedroom units. The unit amenities include individual climate control, private patios or balconies, and walk-in closets. The common areas include a courtyard and recently renovated laundry facilities.

Similarly, Chestnut Court is a two-story, brick garden-apartment complex. It has 48 units and is situated on 2.4 acres. The property includes four one-bedroom units and 44 two-bedroom units. Unit amenities include balconies, air-conditioning and hardwood floors. Complex amenities include a courtyard, playground and laundry facilities.

The properties are both in Vineland, a city in southeastern New Jersey with about 60,000 residents located 40 miles south of Philadelphia and 45 miles west of Atlantic City.

“The seller is a longtime professional who managed the properties well, and the properties’ financials improved throughout our marketing and sale process despite the pandemic,” Sweetwood said in a statement. “There was very strong demand among investors for these properties as soon as we were engaged by the seller. Given the demand, after only one day of tours, we received two non-contingent offers that ultimately exceeded the asking price.”

Saudi Investment Firm Snags $225 Million Majority Stake in Philadelphia Biotech Campus

By Cara Smith-Tenta CoStar News

 A Saudi Arabian investment engine acquired a majority stake in a life science campus in Philadelphia in a $225 million deal, part of a broader trend of Saudi capital flowing into the U.S. tech, life sciences and health care industries.

Sidra Capital, based in Saudi Arabia, acquired a 90% ownership stake in Arborcrest Corporate Campus, an 855,600-square-foot suburban office campus spanning five buildings in northern Philadelphia, according to a statement from JLL, which brokered the sale.

The sale is part of a recapitalization deal for the property’s previously sole owner, Spear Street Capital. The San Francisco-based investment firm retained a 10% ownership interest in Arborcrest Corporate Campus.

In 2016, Spear Street Capital bought the campus for $142.8 million, according to CoStar research.

According to CoStar, the campus is composed of the following properties:

  • 731 Arbor Way, a 137,680-square-foot building that was built in 1960, renovated in 2013 and is 100% leased.
  • 721 Arbor Way, a 183,000-square-foot building that was built in 1960, renovated in 2013 and is 100% leased.
  • 785 Arbor Way, a 202,962-square-foot building that was built in 1970, renovated in 2018 and is 100% leased.
  • 751 Arbor Way, a 115,749-square-foot building that was built in 1991, renovated in 2011 and is 83.2% leased.
  • 801 Lakeview Drive, a 213,412-square-foot building that was built in 1974, renovated in 2010 and is 100% leased.

Since Spear Street bought the property in 2016, a handful of sizable leases have been inked at the campus. Many of those leases were signed by companies in the pharmaceutical, tech and healthcare industries, which have gained popularity among investors as they gain more funding and expand amid the coronavirus pandemic.

Last year, Signant Health, a company that produces technologies used in medical clinical trials, leased 105,538 square feet in the campus.

The healthcare analytics company Cotiviti leased 80,187 square feet in the property in 2018. The computer technology company Unisys Corp. leased 100,000 square feet in the campus the same year.

Saudi Arabia has had a long tradition of investing in major American tech companies. CNN once called Saudi Arabia an “unofficial bank” of Silicon Valley tech companies, as a nod to just how much capital the country funnels to U.S. companies.

In 2018, some U.S. companies temporarily boycott deals with Saudi Arabia after the killing of Jamal Khashoggi, a Washington Post columnist, while at the Saudi consulate in Istanbul.

Last year, Saudi companies beefed up their investments in global healthcare and tech companies, many of which are in the United States.

One example is Saudi Arabia’s sovereign wealth fund backing a $550 million investment in Babylon, a British tech company that primarily works in health care administration.

That fund is a $360 billion sovereign wealth fund, known as the Public Investment Fund, which Saudi Arabia uses to invest in business enterprises around the world.

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Thursday, December 3, 2020

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Blackstone Buys $358M Industrial Iron Mountain Portfolio in Sale Leaseback

By Erika Morphy

Blackstone has extended its substantial industrial holdings a bit more with its acquisition of 13 properties from Iron Mountain in a $358 million sale leaseback transaction. 

The purchase was by the company’s REIT, Blackstone Real Estate Income Trust. The 2.1 million square feet portfolio is located predominantly in California, northern New Jersey and the Lehigh Valley. Iron Mountain will remain in these facilities under an initial ten-year lease term, with options to renew up to an additional 20 years.

“The industrial sector continues to benefit from strong demand driven by e-commerce tailwinds, and we believe these well-located assets are a great addition to our portfolio, which is heavily weighted toward faster-growing sectors like logistics,” David Levine, senior managing director in Blackstone Real Estate, said in prepared remarks. 

This transaction is part of Iron Mountain’s ongoing capital recycling program, and Iron Mountain says it plans to use the proceeds to reinvest in higher growth areas of its business.

“This  transaction frees up approximately $260 million of investable capital on a leverage-neutral basis, that we intend to redeploy into faster growing areas, including our data center business,” says Barry Hytinen, executive vice president and CFO at the REIT.