GLP has entered the European logistics market following its $2.8 billion acquisition of Gazeley. Following the mega takeover, the Singapore-based logistics powerhouse now has significant presence in each of the world’s three main logistics market, adding to the $15 billion worth of assets under management in the US and $10 billion in Asia.
“We have been looking to expand to Europe and this portfolio presents an attractive entry point given the quality and location of the assets.”
– Ming Mei
The Gazeley portfolio comprises 32 million square feet of assets in some of Europe’s key logistics markets, namely the UK (57 percent), Germany (25 percent), France (14 percent) and the Netherlands (4 percent). Existing assets make up around 16 million square feet of the portfolio, while there is a development pipeline of around the same square footage. Approximately 60 percent of the existing assets have been built within the last five years and 85 percent of the development pipeline is focused in the UK, one of Europe’s most land-constrained markets.
Ming Mei, co-Founder and chief executive officer of GLP, said: “We have been looking to expand to Europe and this portfolio presents an attractive entry point given the quality and location of the assets. This transaction adds a premier operational and development platform for us in Europe and is part of our long-term strategy to expand our fund management business.”
In a statement announcing the deal, GLP said that the transaction is expected to be funded by approximately US$1.6 billion of equity and US$1.2 billion of long-term, low-cost debt. GLP further added that it intends to retain the existing management team and the Gazeley brand.
The Gazeley management team averages 19 years of experience managing and developing logistics real estate, with five offices across Europe.
In 2013, Brookfield bought a 95 percent share in UK-based logistics firm EZW Gazeley for $370 million from state-owned investment firm Dubai World. Then, a year 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 the firm’s first global real estate opportunity fund, the $4.4 billion Brookfield Strategic Real Estate Partners. Brookfield then combined the two business in 2014 to create IDI Gazeley, a $3.5 billion platform, which had a European and North American footprint with 150 million square feet of assets housing more than 900 tenants. Speaking at the time, Ric Clark, Brookfield’s chief executive said the firm would grow the platform by leveraging global customer relationships, pursuing attractive opportunities in key markets and developing its land bank.
In May, PERE exclusively revealed that Brookfield was seeking a major refinancing of its logistics business ahead of a potential sale. The Toronto-based alternative assets manager appointed investment bank Morgan Stanley to handle the refinancing. Sources familiar with the matter said at the time that refinancing could be a precursor to the sale of IDI Gazeley’s European business. It was also understood that although Brookfield was not actively marketing a sale, it would re-examine the matter should any offers come in as a result of the refinancing.
Although not confirmed, it has been reported that Blackstone and Schroders were also in the running to buy the Gazeley portfolio.
Commenting on the sale, Brian Kingston, chief executive of Brookfield Property Group, said: “Having bought Gazeley in 2013 and invested in its growth, it has been an excellent investment for Brookfield and our fund partners. Building great businesses is a key pillar of our opportunistic real estate strategy, and Gazeley is a good example of how we have been able to successfully do this.”
GLP’s publicly-stated European ambitions were hinted at during an exclusive interview with PERE back in 2015. Dr Seek Ngee Huat, the chairman of GLP’s board, stated that the firm would be following up its $8.1 billion purchase of US logistics company IndCor Properties from Blackstone, by casting its eye over the European logistics market with a view to an eventual purchase.
GLP’s push into Europe comes at a time when the logistics firm is going through a change of hands. In July, a consortium of investors called Nesta Investment Holdings that include GLP’s chief executive Ming Mei, Hopu Investment Management, Hillhouse Capital, Bank of China Group Investment and the Vanke Group agreed to acquire the Singapore-listed firm for S$3.38 ($2.46; €2.15) per share, a deal valuing GLP at approximately S$16 billion on an equity value basis. Following the acquisition, PERE reported that the firm had earmarked plans to put to work $11 billion of uncalled capital, a potential new China income fund and an expansion into Europe.