(NYSE: PLD), the world's largest warehouse and distribution center owner, announced it will sell a portfolio of North American industrial properties, stakes in three property funds and a hotel interest to affiliates of Blackstone Real Estate Advisors for $1.02 billion.

Blackstone will acquire about 180 industrial properties totaling 23 million square feet in nearly 30 metros across the nation. The world's largest private-equity firm will also acquire ProLogis' 25% interest in the Hilton New Orleans Riverside hotel and its 20% interest in ProLogis North American Property Funds VI - VIII. The deal is expected to close in mid-November.

A spokeswoman for the Denver-based company declined to identify the specific properties in the portfolio, which are located in Atlanta, Austin, Baltimore, Central Valley, CA; Charlotte, Chicago, Cincinnati, Columbus, Dallas, Denver, Eastern Pennsylvania, El Paso, Houston, Indianapolis, Kansas City, Las Vegas, Los Angeles, Memphis, Nashville, New Jersey, Orlando, Phoenix, Portland, Reno, San Antonio, San Francisco, Tampa and Virginia.

The portfolio, which constitutes $910 million of the total purchase price, is 95.6% leased with an average term of 34 months and a weighted average building age of 23 years. The consideration represents a capitalization rate of about 8%.

Coupled with about $600 million in dispositions and contributions, the transaction to sell the older "non-strategic" assets to Blackstone would increase the amount of proceeds raised this year by ProLogis to more than $1.6 billion. The company previously announced it expected to raise between $1.3 billion and $1.5 billion in 2010 to repay debt and fund development activity.

"This transaction with Blackstone supports our strategy of redeploying our investment in non-strategic, direct-owned North American assets into further de-leveraging and future development activity to enhance the geographic diversification and overall quality of our portfolio," said Walter C. Rakowich, chief executive officer, in a release.

REITs have tapped the public markets for more than $60 billion since the beginning of 2009, using the proceeds to cleanse their balance sheets and more recently, begin acquiring property. Slow consumer spending and shrinking retail inventories have slowed the pace of recovery in the warehouse space, and industrial properties have been among the last in the commercial sector to see demand and values stabilize.

ProLogis struggled after expanding rapidly worldwide during the boom years, its stock falling to an all-time low of $2.28 a share in 2008 amid talk of bankruptcy.

The company rallied, raising $1.4 billion in an equity offering last year, but Wall Street has remained concerned about ProLogis' ability to deleverage. On July 28, Fitch Ratings downgraded the company's long-term bond rating from BBB to junk bond status due to high debt, declining rents and difficulty leasing space in new developments.

That said, Fitch acknowledged at the same time that ProLogis will gradually realize increased cash flow from lease up of new development. The company has access to multiple capital sources, a high-quality property portfolio, good liquidity and manageable debt maturities, Fitch said.

The company has made progress selling assets since September, raising about $330 million through disposition of properties in Europe and Japan. Combined with first-half 2010 sale proceeds of $249 million and smaller, one-off land and property sales, ProLogis raised about $600 million in the first three quarters of 2010 not including the Blackstone transaction.

In a research note Tuesday, Citibank said it views the asset sale as "a long-term positive, freeing up significant capital and improving portfolio quality."

Blackstone affiliate Hilton Worldwide, Inc. will assume full ownership of the Hilton New Orleans Riverside when the sale of PLD's 25% interest for approximately $100 million closes. ProLogis acquired the hotel interest in its September 2005 merger with Catellus. The property fund portfolio being sold to Blackstone includes PLD's 20% interest in three funds that collectively own 75 properties in 11 states. ProLogis will manage the industrial and property fund portfolios on behalf of Blackstone when the deal closes.