Blackstone to Exit China Logistics Business with $372M Sale to Ping An

If the deal is successful, Blackstone’s logistics company in China would make a significant exit.

Blackstone Inc., one of the world’s largest alternative asset managers, is in advanced negotiations to sell three logistics projects in China to Ping An Insurance Group Co., making a significant exit from the business due to the rising appetite among domestic investors.

The United States (US) company plans to sell the real estate in the China Greater Bay Area to Ping An Life Insurance Co. for around 2.7 billion yuan ($372 million), as informed by the insiders who asked not to be named since the information was confidential. According to them, the sale includes a 49-acre park in Foshan and two additional properties in Dongguan, which signifies a notable shift in Blackstone’s China strategy.

The US firm had aggressively expanded its logistics portfolio until 2022. The property market downturn rippling across the economy and shifting investor sentiment have prompted this revision in their foreign investment strategies. Some foreign businesses have completely retreated, while others have reduced their investments.

Blackstone will continue to manage the projects after the sale. According to the insiders, they will finalize the planned transaction in the second quarter of 2025.

Cailian was previously reporting the deal. The asset management division of Ping An Insurance and Blackstone declined to comment.

If the deal is successful, Blackstone’s logistics company in China would make a significant exit.

In January, the Canada Pension Plan Investment Board sold its 49% stake in four real estate joint ventures with Longfor Group Holdings Limited to a Dajia Insurance Group affiliate for C$235 million ($164 million).

It was once upon a time a thriving segment of China’s commercial real estate market. But since 2023, the logistics centre has been showing indications of stress.

People constructed many of these hubs since they hoped to have a long-lasting boom in e-commerce, manufacturing, and food storage, but many are losing tenants. It forced the current building owners to lower their rent and reduce the lease terms.

According to the researcher Warehouse In Cloud, the Greater Bay Area, where Blackstone’s assets are located for sale, has seen the lowest vacancy rates in the country.

The group of southern Chinese cities close to Macau and Hong Kong experienced a benefit from the boom in international e-commerce.

The discussions also show that long-term investors, including Chinese insurers, are looking to acquire companies to increase their returns, as a deflationary spiral threatens to reduce the yield from fixed-income investment.

China’s 30-year government bond yield is at its lowest point since 2005, at about 2%.

According to the insiders, the logistics parks for sale give higher returns than the China bond.

Local investors were enticed by the prospects of listing logistics assets through real estate investment trusts or REITs. Many people bought these funds for their dividend income last year.

Real estate investment trusts allow individuals to invest in large-scale, income-producing real estate.

The three properties available for sale are assets under DragonCor, a portfolio company owned and run by the Blackstone real estate funds established in 2018.

Due to the changing dynamics in the country’s real estate industry, the US firm decided to unload its China logistics projects. Due to the lesser lease agreement and pressure to lower rents, they had to let go of the logistics centre. However, the Greater Bay Area remains a bright spot, with some of its lowest vacancy rates, making it an attractive investment for Ping An.

Since China is evolving in economic conditions, such acquisitions may become more common as investors pursue new ways to navigate the shifting financial landscape.