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Julian Carey on combining the best of both worlds at Blackstone’s new logistics company

Recently launched Indurent brings together St Modwen Logistics and Industrials REIT

Julian Carey’s industrial experience started early. As a child, he remembers being taken around industrial estates by his father, Roger Carey, an industry grandee who was managing director at Slough Estates before going on to lead Industrious, which was sold to Brixton in 2004.

Carey says he tried to avoid following in his father’s footsteps, but after the market recovered following the financial crisis, it became clear that the industrial sector presented a compelling opportunity. Around the same time that Blackstone was also starting to focus more closely on the sector, Carey’s firm C2 Capital teamed up with Morgan Stanley Real Estate investing to launch a multi-let industrial landlord platform in early 2015. That was then sold to Stenprop two-and-a-half years later, marking the start of the listed company’s metamorphosis into Industrials REIT.

Fast-forward to today, and following Blackstone’s £51m acquisition of Industrials REIT last year, Carey has been made chief executive of Indurent.

The company is Blackstone’s third big industrial-focused company, sitting alongside Logicor and Mileway. It combines Industrials REIT with the logistics arm of St Modwen, the listed company Blackstone acquired in 2021 in a £1.3bn deal.

Unlike the other two companies, Indurent is solely UK-focused and covers the full range of the market, from small industrial units to big logistics warehouses.

“The rationale for putting the two businesses together is to take the proven development capability and land bank of St Modwen Logistics, and put it together with the best-in-class operating platform of Industrials REIT. The two together are stronger than the two apart fundamentally.”

Julian Carey, CEO of Indurent

Growth plans

The portfolio currently spans 27m sq ft, but with Blackstone behind it, Indurent has plans to grow this figure significantly. There is plenty of embedded growth already thanks to the size of the development pipeline inherited from St Modwen – coincidentally also 27m sq ft.

Indurent plans to develop out around 2m sq ft a year, and keep replenishing the pipeline.

Developing assets to high environmental standards will be a key area of focus, but Carey says Indurent will also invest heavily in a capex programme to improve the environmental credentials of its existing portfolio. As part of that, the company is planning to increase its solar capacity by 75% this year.

At the same time, Indurent will continue to be active in the investment market, acquiring new buildings, including both multi-let industrial and logistics assets. So far this year, it has already invested around £400m.

Growing the business will deliver significant efficiency gains. A year before Blackstone took Industrials private, the REIT said that thanks to the technology-driven platform it had built, it would be able to cut its EPRA cost ratio from just over 40% to 30% by doubling the size of the portfolio.

The technology platform, called Hive, is now being used across Indurent. Carey says it will deliver benefits for the business and its occupiers that go beyond cost saving.

“We’ve now onboarded all of St Modwen’s logistics assets into the Hive and it’s gone really well. It’s already delivering efficiency benefits, and customer service benefits. We have much more accurate data, and more timely data in the hands of the people when they need it, so our staff are able to spend more time working for our customers rather than trying to source information.”

Julian Carey, CEO of Indurent

Joining forces

The integration of the two businesses is now largely complete, following a formal launch over the summer. Staff have moved out of St Modwen’s offices at Longbridge into central Birmingham – a move that Carey says has been successful, as they are now closer to the group’s key advisers and its assets.

At the same time, the size of the group’s Stockport office has been doubled. The London team remains at Great Portland Street, where St Modwen and Industrials happened to already occupy the same building.

Carey says the two sides of the business have gelled well. Carey says the two sides of the business have gelled well. He says: “I’m really privileged to lead such a fantastic team. It’s been brilliant bringing together the best of both worlds.”

Chief financial officer: Tom Olsen

Olsen joined last year, initially at St Modwen Logistics, having previously been head of Revantage UK, which provides corporate services to Blackstone’s real estate investments.

Head of transactions: James Cooper

A former partner at InfraRed Capital Partners, Cooper joined St Modwen to lead the transactions team in 2022.

Head of development: Lee Nash

Nash was previously head of development at St Modwen Logistics.

General counsel: Sarah Bellichi

Bellichi was the longstanding general counsel and company secretary at Industrials.

Head of portfolio management: Simon Ross

Formerly head of asset management at Industrials, Ross oversees a 40-strong team responsible for leasing, refurbishment, and facilities management.

Leasing outlook

During the integration process, the market backdrop has remained largely positive. Vacancy has ticked up in the larger shed market as supply from the Covid-19 pandemic boom years has come through, and demand has returned to pre-2020 levels. However, new development has been slowing, and the return of Amazon to the market is indicative of a wider pick-up in demand in recent months.

Carey is upbeat about Indurent’s leasing prospects. “It looks like next year we should have a good demand environment and limited supply, which is exactly where you want to be when delivering new product.”

Longer term, he argues that demand will continue to be supported by structural tailwinds. As well as highlighting the oft-cited role of e-commerce growth and nearshoring, he points to other less-talked-about factors, including what he calls “the gentrification of the industrial market” with new uses such as leisure, retail, and healthcare moving in, partly thanks to new technology.

“The impact of satnav is pretty unsung, but the fact that you can type something into your phone and it’ll take you straight there has really opened up real estate,”

Julian Carey, CEO of Indurent

The market has come a long way since Carey first started touring industrial assets with his father. He may not have wanted to follow in his footsteps, but looks to have got the bug now.