Meyer Bergman sees logistics investments as first step to a wider strategy – Exclusive

The retail specialist is looking to broaden its investment strategy to include associated asset classes, starting with accommodation for the final leg of retailers’ supply chains.

Meyer Bergman, the London-based private equity real estate firm currently best-known for making investments in the retail property market, is looking to broaden its strategy to include other property types.

PERE can reveal the firm has hired its first executive to focus on logistics assets across Europe as it seeks to add last-mile distribution properties to its retail-heavy holdings. The firm has hired Marco Riva from European logistics giant Logicor where he is understood to have overseen €2 billion of investments during a five-year period.

The expansion is part of a larger strategic repositioning by the firm to include property-types connected to its more familiar retail assets. Besides last-mile logistics properties, it is believed mixed-use assets with office components will also feature more on its investing programs going forward.

Markus Meijer, the firm’s chief executive, said: “We are looking to broaden our investment focus to include the final leg of the supply chain, the so-called last mile to the end consumer.”

He added: “It’s a logical next step for us as long-standing specialists in retail, a sector where retailers now operate fully integrated omni-channel businesses to stay relevant in today’s competitive environment.”

“We have already identified a pipeline of opportunities in European markets where there are shortages of these facilities to service the growing needs of online commerce.”

Indeed, Meyer Bergman is thought to be close to completing its first logistics deal.

In an earlier interview with PERE, Meijer described logistics as increasingly a direct extension of retail and so “it’s a space we’re very actively looking at.”

“I think there will continue to be a blurring between the retail and the distribution side, whether that means that retailers and distribution players will start to merge, or there’s some other form of efficiency, it’s bound to happen,” he said.

“We have to think as a retail investor and as a mixed-use investor and continue to adapt and to learn more about these spaces, so that we can continue to actively target them and make the right decisions. But I think they will increasingly form an integral part of a retail investment strategy.

The firm has approximately €6.2 billion of predominantly retail assets under management, according to PERE research, and has raised almost €1.9 billion of equity from institutions for its flagship Meyer Bergman European Retail Partners fund series, the most recent of which, Partners III, closed on €816 million earlier this year.

Meyer Bergman’s expansion comes at a time of contrasting performances for the logistics and retails spaces. As e-commerce continues to pull consumers from shops to online purchasing, the performance of logistics assets has improved while many retail assets have struggled for growth.

According to global broker Cushman & Wakefield, logistics yields in Europe have fallen below 6 percent on average for the first time on record. The firm said the overall logistics yield in the region dropped 14 basis points to 5.95 percent in the second quarter of the year, its lowest level since the firm started records in 1992. In contrast, the firm said high street retail, a type of retail regularly acquired by Meyer Bergman, had seen yields soften in locations and overall move out 1bps to 4.19 percent.

Lisa Graham, head of EMEA industrial and logistics research & Insight at C&W, said in research note released this week: “Logistics properties have increasingly become a desirable asset for real estate investors on the back of the growth for e-commerce and the streamlining of supply chains, and now account for a growing share of investment activity supporting a strong reduction in yields over this period. Yields in almost all monitored markets are at their 10-year low, although we believe there is still room for further downward movement in selected markets during the second half of the year.”

Nevertheless, Meyer Bergman has generated strong performances from its retail-oriented funds. According to PERE data, the firm’s first fund was generating a gross levered IRR of 14.2 percent and an equity multiple of 2.2x, as of Q3 last year, while its second was producing IRRs just shy of 20 percent and a multiple of 2x, against a value-add risk and return profile.

Riva, who joined as a senior vice-president, is not the only new arrival at the firm. In addition to announcing his hire, Meyer Bergman is expected to announce two new senior managing directors: Lee Purcell as global head of investor relations and Sachin Rupani as head of acquisitions.