Burstone Group, a leading international real estate investment firm, has announced a major strategic development that will significantly expand its fund and investment management capabilities. The company has entered into a pivotal partnership with Blackstone, the world’s largest alternative asset manager, marking a significant milestone in Burstone’s growth trajectory.
The partnership, which centers around Burstone’s Pan-European Logistics (PEL) platform, will see Blackstone acquire an 80% stake in the platform, valued at €1,022 million (R20 billion). Burstone will retain a 20% co-investment stake while continuing to manage the assets within the portfolio. This transaction is part of a broader strategy that will see Burstone’s third-party Assets Under Management (AUM) increase nearly fivefold from R4.7 billion to approximately R23.0 billion.
The PEL platform, amassed since 2017, comprises 32 high-quality midsize and big-box logistics properties strategically located in key urban centers across Europe, with the majority of assets situated in Germany, France, and the Netherlands. The portfolio, spanning 1.2 million square meters, boasts a 97% occupancy rate, primarily housing tenants in the third-party logistics sector.
Burstone CEO Andrew Wooler expressed his enthusiasm about the partnership, stating, “This collaboration with Blackstone is a testament to the strength of our European team and our proven track record in the logistics sector. Partnering with such a globally renowned institution not only enhances the scalability of our operations but also opens up new avenues for growth in the European market.”
The strategic benefits of this transaction are manifold. The partnership will enable Burstone to significantly deleverage its balance sheet, reducing its Loan-to-Value (LTV) ratio by 12.5%, thereby providing greater financial flexibility. Furthermore, the deal is expected to positively impact Burstone’s earnings, with an immediate increase of 1.3% based on historical FY24 distributable earnings.
In addition to the Blackstone partnership, Burstone is negotiating to acquire a 25% co-investment stake in a €170 million German light industrial platform. This move is expected to be highly earnings accretive, building on Burstone’s successful track record in similar investments.
Burstone’s growth strategy also includes its ongoing joint venture with the Australian Irongate Group. This JV has recently launched a new industrial venture in Queensland, Australia, backed by a significant equity commitment. The initial portfolio acquisition, valued at approximately A$140 million, marks another step in Burstone’s international expansion.
As Burstone continues to build its third-party fund management platform, the company is also in talks with cornerstone investors in South Africa to establish a new Core Plus platform. This initiative is part of Burstone’s broader strategy to enhance returns on capital deployed and maximize operational leverage.
Looking ahead, Burstone’s strengthened balance sheet and increased financial headroom position the company well for continued growth across its core markets. Wooler emphasized the Group’s commitment to capitalizing on the best international and local opportunities to create sustained shareholder value.
