Brookfield oppo fund buys Euro logistics giant

Toronto and New York-based Brookfield Asset Management has led a group of institutional investors via its global opportunistic fund to take over EZW Gazeley, the owner of 5.64 million square feet of logistics property in Europe.

Brookfield Asset Management, the New York and Toronto-based firm, has led the takeover of European logistics developer EZW Gazeley on behalf of its first global opportunistic fund, Brookfield Strategic Real Estate Partners (BSREP).

The corporate acquisition will see the fund controlling some 5.64 million square feet of large scale logistics warehouses and distribution parks across the UK, Western Europe and China, with a further 11.84 million square feet held under option agreements. Brookfield owns 30 percent of the units in BSREP.

No financial details were provided, however it is believed that current owner Dubai World appointed Citi bank in March 2012 to offload the company as it was deemed it to be a non-core investment. Dubai World acquired the company for more than £400 million ($621 million; €468 million) in 2008 from US retail giant Walmart.

The acquisition price Brookfield is paying is reported to be in the area of £370 million, though a spokesman declined to comment. It is the first disposal of an overseas asset by Dubai World since agreeing a debt repayment plan with creditors in 2011 after teetering on the brink of financial collapse. Proceeds from the sale of Gazeley are expected to go towards the repayment of a $1.2 billion loan secured by associate firm JAFZA in June last year, reported Reuters.

In a statement, Brookfield said the acquisition gave it “exposure to high quality assets, which offer potential growth and value enhancement”.   

“Brookfield will seek to build upon Gazeley's extensive European footprint while capitalizing on its experience and growing presence in the Middle East and China,” it said. Further, “Brookfield's capital base, property operating experience and global platform will transform Gazeley from a developer of logistics warehouses to a full-service logistics asset manager, allowing Gazeley to offer a wider range of services to its customers,” the company added.

Ric Clark, chief executive officer of the Brookfield Property Group, a listed entity of Brookfield, said: “We are pleased to have completed the acquisition of Gazeley, a high quality business with a great track record, strong management team and global footprint. With Brookfield's financial resources we see great opportunities to grow the business both as an investor and a developer of logistics assets.”

Hisham Abdullah Al Shirawi, chairman of EZW, the holding company of Gazeley, added: “EZW is pleased to have completed this milestone transaction. Our relationship with Gazeley has been fruitful and we will continue to work together in areas of common interest.”

In a recent interview with PERE, Clark and Barry Blattman, the head of Brookfield’s real estate fund business and co-head of its opportunistic real estate program, explained how its Brookfield Strategic Real Estate Partners (BSREP) represented the firm’s first global opportunistic real estate fund.

Brookfield began laying the groundwork for a global opportunistic real estate strategy less than a decade ago with the 2006 launch of its first opportunistic real estate fund, the Brazil Retail Property Fund. On behalf of the vehicle, which raised $800 million in commitments, the firm acquired interests in a number of Brazilian shopping centers and regional malls.

Brookfield went on to raise Brookfield Real Estate Opportunity funds I and II, which invested in under performing real estate properties in North America, in 2006 and 2007, respectively. However, 2009’s Real Estate Turnaround Program, which made equity and debt investments in undervalued real estate companies and portfolios, was Brookfield’s first global real estate capital-raising effort.

At the time of the interview, PERE reported the firm had raised $2.6 billion of its $3.5 billion equity target for BSREP and is expected to hold a final close this month.

In July 2012 it hired David Brush, chairman of RREEF’s global opportunistic real estate business, to help lead efforts to make opportunistic investments in Europe.