Meyer Bergman is looking to raise more than €700 million of equity for a new pan-European last-mile logistics platform targeting single-tenant assets, PERE has learned.
The London-based private equity real estate firm intends to collect the capital through a combination of commingled funds and co-investment structures over the next two to three years. It aims to grow the new platform, dubbed Crossbay, to €2 billion in assets under management over the same period.
Crossbay will capitalize on the region’s surging demand for last-mile distribution centers while Meyer Bergman continues to diversify away from the retail investments for which it is best known.
Including a near-term pipeline, Crossbay currently manages more than €500 million in assets, which were acquired through a mix of fund and co-investment capital. It is expected to double the size of its portfolio in the coming year.
“Our feeling is that while we could probably deploy about €150 million to €200 million of equity a year with this strategy, we have to do it relatively quickly, because competition is picking up and pricing is increasing”
The platform, spanning 70 properties across Italy, France, Germany, Spain, Belgium and the Netherlands, has an occupancy rate of more than 97 percent and a weighted average lease break of five years. Its tenants are a mix of third-party logistics providers, such as FedEx and DHL, and e-commerce brands, including Amazon.
With an average size of 5,000 to 20,000 square meters, and transaction prices ranging from €5 million to €20 million, Crossbay’s portfolio is 60 percent allocated to Spain and Italy, 23 percent to France and Germany, and 17 percent to the Benelux region.
Marcus Meijer, the firm’s chief executive, told PERE: “Our feeling is that while we could probably deploy about €150 million to €200 million of equity a year with this strategy, we have to do it relatively quickly, because competition is picking up and pricing is increasing.”
European logistics investment volumes reached €35.9 billion in 2019, the second-highest level in the past seven years, according to real estate services firm Savills.
Meyer Bergman entered the logistics sector in 2018 as part of a wider strategy to shift away from retail while expanding into related property types. The firm acquired its last pure retail asset in 2014, sold it in 2016 and now has just one shopping center left.
Since then, competition has been heating up but pricing remains attractive, said Meijer: “I think that’s why we were keen to create a genuine head start in 2019 and 2020 – to enable us to get to a serious size of platform before more people plowed into the market and made the pricing relatively unattractive.”
Crossbay is headed by Marco Riva, who led more than €2 billion of deals while at Blackstone’s big-box warehouse business Logicor. It is the first pan-European real estate platform targeting single-tenant assets. According to Meijer, such assets are less complex to manage than big-box warehouses or multi-let units, and have lower capital and operating expenses.
“There are structural, long-term growth drivers underpinning single-tenant distribution centers thanks to the rise of e-commerce and our on-demand culture,” said Meijer. “Small lot sizes, though, make individual single-tenant last-mile assets unappealing to institutional investors who want scale. That is why we launched Crossbay – to give institutional investors access to this rapidly growing sub-sector.”
Aside from Marco Riva, Meyer Bergman has so far hired 18 people for the platform. Among these are two new hires in the Netherlands last year, and a newly recruited dedicated team to focus on German acquisitions. PERE can reveal that the firm is looking into hiring a pan-European head of asset management who will be responsible for overseeing all the platform’s portfolios and leases.
Moving from retail to logistics, according to Meijer, was a logical shift. “As you see retail declining, this sector is benefiting directly. And the fact we have been a pan-European retail specialist for years has made it easier for us to be able to deploy this strategy in all these European countries where we have on-the-ground teams. I think that is how our specialist heritage helps now.”
Marcus Minckwitz, director in the regional investment advisory EMEA team at Savills, said of Meyer Bergman: “As retail specialists, they understand the relationship between real estate and consumer markets. The challenge for them is just access to products and competition in the investment markets. There are a lot of people with last-mile strategies, which will either drive up pricing or not everyone will be able to get the cash the way they intend to.”
Meijer said covid-19 could help to accelerate the growth of the new platform, given that lockdowns have helped fuel e-commerce activity: “Demand for this type of assets will only have increased over the last few weeks and months, which should help us in terms of rental growth.”
Jack Cox, head of EMEA industrial and logistics capital markets at CBRE, said that covid-19 has highlighted the importance of supply chains and logistics to people’s daily lives, and that this has prompted a surge in the number of new managers entering the space: “There will be more competition and more supply of products because there is more fundamental demand from occupiers for this type of last-mile logistics space.”
Meijer said that although fundraising has slowed because of the pandemic, he expects it to rebound as the recovery takes hold. However, he added that the crisis has helped the firm on the acquisition side: “Not that we’ve seen any logistics distress, because obviously it is one of the sectors that’s holding up well, but I think some sellers are a bit more amenable to the pricing discussion.”
The firm currently manages €5.5 billion of residential projects, €3.5 billion of retail investments, €1.8 billion of office assets and more than €500 million of logistics assets, both existing and under development.