REITs giant Tritax to acquire Blackstone's 1 billion UK warehouse assets, will pay part of the consideration with 9% equity.

Blackstone (BX.US) has agreed to sell its 1 billion (approximately $1.3 billion) UK logistics portfolio to Tritax Big BoxCareTrust REIT Inc, a deal that will see the alternative asset manager take a partial 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 Inc, giving the New York-based firm around 9% ownership. Tritax will issue shares to Blackstone Inc at a price of 161p per share, a 13.5% premium to its closing price last Friday, but below the EPRA net asset value of 188.17p per share reported by the owner for the six-month period ending in June. Blackstone has been a key buyer of UK and European logistics assets, betting on strong warehouse demand driven by the rise of e-commerce and recent supply chain restructurings. The company has amassed a large portfolio through its Indurent platform (primarily through the consolidation of two previously listed companies) and continues to acquire through its funds. The UK CareTrust REIT Inc market has been subdued, with stock prices consistently below reported asset values, providing Blackstone with a steady source of deals, having recently acquired Warehouse REIT. But it also means that, as the real estate industry faces the end of the era of zero interest rates and rare large private sales, the appeal of options provided by the public market for asset disposals is low. James Seppala, Chairman of Blackstone Europe, said: "We have decided to hold a stake in Tritax Big Box REIT in this transaction, reflecting our confidence in the company's long-term strategy and prospects." The deal will increase Tritax's loan-to-value ratio (a measure of its relative debt level) from the previous 31% to 35%. Besides previously announced guidance to bring this ratio down to the lower end of its target range of 30%-35%, the company plans to sell approximately 300 million worth of assets over the next 18 months.