As the year winds down it is time to look toward 2023 to see where M&A dealmakers are anticipating chips being placed. The logistics sector is one that is poised for continued M&A interest as supply chain issues are still rampant. ATL Partners and Blackstone are two firms keeping an eye on the logistics and supply chain industry.
Blackstone Inc., through its Blackstone Real Estate arm, has acquired six industrial properties in the Toronto area. The acquired logistics properties total 1.5 million square feet and are fully leased in a deal worth $297 million in cash. The December 5th transaction represents one of the largest Canadian private industrial portfolio deals in Canada in recent years.
“Global logistics is one of our highest-conviction investment themes, and high-quality, last-mile industrial properties like these continue to benefit from some of the strongest real estate fundamentals in Canada,” Janice Lin, Blackstone’s head of Canada real estate, recently told Bloomberg shortly after the deal was announced.
Blackstone isn’t the only firm keeping an eye on the logistics and supply chain sector. Kirby Fine, a partner with ATL Partners, believes that there is space for M&A within the industry but changes still need to be made.
“Supply chain shortages, record high freight rates, and geopolitical tensions have increased onshoring and nearshoring efforts as manufacturers focus on supply chain resilience,” Fine says. “Accordingly, we expect onshoring and nearshoring will continue to be a secular driver of industrial demand for domestic warehousing, transportation, and logistics, and lead to further consolidation of third-party logistics providers.”
The sector does not come without its concerns, however. Fine notes that seller valuation expectations will need to adjust downward to drive M&A within the logistics sector in 2023. Despite the higher freight rates in 2022 yielding elevating earnings for logistics firms, Fine believes that dealmakers view the sector as challenging as buyers are looking over the edge of an earnings cliff wondering how far it is to the bottom.
“We’re focused on subsectors that stand to benefit from long-term secular growth trends, such as increasing e-commerce penetration and growing domestic industrial demand from onshoring and supply chain security initiatives,” Fine says. “Example subsectors include domestic freight forwarding and transportation networks, e-commerce fulfillment, freight management, supply chain technology, and warehouse automation.”
What kind of deals are you seeing in the logistics and supply chain sector and where do you think the M&A market is heading for 2023? Let me know at [email protected].
–Cole Lipsky
