Prologis, the world’s biggest warehouse owner, has launched a bid to buy Blackstone’s portfolio of logistics properties in what would be the largest ever private real estate deal, in a sector where the Covid-19 pandemic and the rise in online shopping have pushed values up sharply.

Prologis has made a non-binding offer of a little over €21bn for Mileway, a portfolio of almost 2,000 European warehouses that Blackstone has been building through acquisitions over the past six years, according to people familiar with the matter.

The company now has about six weeks to finalise a bid that satisfies a number of conditions laid down by the funds selling Mileway, according to one of the people.

Warehouses have been a winning bet over the past two years, in which the proportion of sales made online has surged across the continent while coronavirus forced shoppers to stay at home.

The disruption to supply chains caused by the pandemic, the blockage of the Suez Canal by the container ship Ever Given and more recently Russia’s invasion of Ukraine have also led companies to stockpile more materials.

Prologis shares are more than 60 per cent up on their pre-pandemic level, giving the company a market capitalisation of close to $120bn. 

Blackstone had indicated that it would retain its exposure to the sector last month when it announced plans to recapitalise Mileway at a €21bn valuation, allowing investors to shuffle in or out while retaining control of the portfolio.

But those plans included a 75-day “go-shop” period in which higher bidders could put forward an offer. Of 20 or so prospective buyers approached by Morgan Stanley, the bank managing the process, eight looked seriously at Mileway but only Prologis submitted a non-binding bid, said one of the people.

Should Prologis put forward a binding offer, the consortium behind the proposed recapitalisation — which includes previous Mileway investors and a number of Blackstone’s own funds — could respond with a new proposal.

If the Prologis bid, which was first reported by React News, is successful, it would give the company a dominant position in European “last-mile” facilities — smaller warehouses which serve customers in cities.

Blackstone and Prologis declined to comment.

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