Brookfield readies IDI Gazeley sale with refinancing – Exclusive

Morgan Stanley has been enlisted to arrange the logistics firm’s refinancing ahead of a possible sale process. 

Brookfield Property Partners is seeking a major refinancing of its logistics platform IDI Gazeley ahead of a potential sale.

The Toronto-based alternative assets manager has appointed investment bank Morgan Stanley to handle the refinancing. Sources familiar with the matter have said the refinancing could be a precursor to the sale of IDI Gazeley's European business.

A person with knowledge of the situation confirmed that, although Brookfield was not actively marketing a sale, or in any formal discussions with potential suitors, the firm would re-examine the matter should any offers come in as a result of the refinancing.

IDI Gazeley has a European and North American footprint with 250 million square feet of assets housing more than 900 tenants. The firm was formed in May 2014 after Brookfield merged two logistics companies, UK-based EZW Gazeley and US-based Industrial Development International.

In June 2013, Brookfield bought a 95 percent share in EZW Gazeley for $370 million from state-owned investment firm Dubai World. Two months later, it acquired a 100 percent share in IDI for $595 million from the US subsidiary of Japanese construction firm Kajima Corporation.

Both businesses were acquired on behalf of Brookfield’s first global real estate opportunity fund, the $4.4 billion Brookfield Strategic Real Estate Partners.

Investor appetite for market share in European logistics is strong at present. In October 2016, P3 Logistic Parks was sold by TPG and Ivanhoé Cambridge to Singaporean sovereign wealth fund Government Investment Corporation in a deal which valued the platform at €2.4 billion, one of the largest real estate transactions in Europe last year. The deal happened a month after P3 refinanced its portfolio, sourcing €1.4 billion of fresh capital.

Morgan Stanley played a key role in the P3 refinancing. The bank underwrote a €600 million loan secured by western European and Polish properties, in which pbb Deutsche Pfandbriefbank also participated. A second, similarly sized loan, backed by assets in the Czech Republic and Slovakia, was provided by a four-bank club of local lenders; CSOB, Komercní Banka, UniCredit Bank, and Ceská Sporitelna. A third, smaller loan from Raiffeisen Bank International was secured on P3’s Romanian warehouses.

Blackstone has also reportedly been looking to sell its European logistics platform, Logicor, since last summer. The New York-based asset manager is understood to be considering an IPO, thought to value the company in the region of £13 billion ($16.7 billion; €15.3 billion), as well as a private sale. As of March, buyers from Asia and the US had reportedly shown a keen interest in the business.

Brookfield, IDI Gazeley and Morgan Stanley declined to comment.