Excluding the Mediterranean and parts of Central and Eastern Europe, logistics and industrial investment in Europe has reached a five-year high. In the Nordics, the first half of the year saw a 217 percent increase in such deals, while parts of Western Europe saw a 21 percent surge, according to Jones Lang LaSalle.
In line with the explosion of the sector, two further examples of institutional investment arose last month. Heitman, the Chicago-based private equity real estate firm, announced a mandate to secure core assets in Germany, France and the UK on behalf of MEAG, the German asset manager that manages €9.5 billion of property for insurers Munich RE and ERGO. Meanwhile, PERE has learned that a London-based opportunity fund is in talks to acquire a listed industrial property company.
“Investment activity in European logistics markets is being driven by strong demand from a range of regional and international investors, including North American pension plans, sovereign wealth funds and private equity buyers,” said Jon Sheehan, director of research at Jones Lang LaSalle. “The value of completed transactions has been boosted by a number of large joint venture deals, with more than €4 billion invested in four such platforms so far this year. Investors are attracted by the sector’s robust income return and growth opportunities based on strong demand and supply dynamics in the occupational market.”
In October, TPG Capital and Ivanhoe Cambridge underlined that appetite when the pair teamed up to acquire PointPark Properties, a European developer and asset manager of warehouse properties with a portfolio of 48 assets throughout Continental Europe, plus a significant land bank. The off-market deal involved Arcapita, the Bahrain bank that exited Chapter 11 proceedings in September.
The larger trend towards logistics, however, can be traced back to early 2011 at least, when German insurer Allianz and AMB Europe created a €470 million joint venture for the sector. In other instances, Prologis and Norges Bank created a 50:50 joint venture for a €2.4 billion European platform at the end of last year and, in June, Brookfield Property Partners bought a 30 percent stake in Gazely from Dubai World. In addition, UK property company Segro and Canada’s PSP Investments formed a 50:50 joint venture this summer involving all of Segro’s continental assets – a deal valued at almost €1 billion. And all along, The Blackstone Group has been steadily building up its logistics platform, Logicor, through a series of transactions that currently total about €1.5 billion.
In its European logistics and industrial report, Jones Lang LaSalle noted that non-European or globally sourced capital invested in the sector rose 37 percent year-on-year compared to the first half of 2012, making it one of the hottest investment trends in Europe for institutional real estate investors. Meanwhile, portfolio and platform sales have risen 125 percent. The UK received the most capital, estimated at €725 million, followed by Germany with €340 million and France with €335 million.