P3 Logistic Parks, the pan-European owner, developer and manager of logistics real estate, has a new owner and a new approach to investing.
This new approach can be seen with its first deal since its much-publicized €2.4 billion purchase by Singaporean sovereign wealth fund GIC in November – one of Europe’s largest property transactions of 2016.
In mid-April, the Prague-based firm picked up an 11-strong portfolio of logistics assets for €243 million. The assets, totaling 3.3 million square feet, are positioned in strategic locations around Madrid, Zaragoza, Valencia and Biscay. In addition to the already built assets, two of the warehouses have adjacent land totaling more than 260,000 square feet, with potential for P3 to develop.
The most intriguing aspect of the deal was the fact it was P3’s first since its takeover – precisely 100 days at the time of writing – and how its investment approach differs now it was under new management.
“We knew of the Spanish portfolio before the GIC’s purchase of P3 and it was on our target list. GIC quickly said, ‘Go for it,’” said P3’s chief executive, Ian Worboys. “It has been 100 days since the takeover and the difference is tangible. It has allowed us to have a different outlook on life because of scalability and longevity. GIC is a long-term investor so it looks 10 to 20 years ahead, whereas TPG and Ivanhoé Cambridge had a different agenda which meant they were always looking two or three years ahead.
“It is exciting for us, because we now have a much longer view, which means we can look at land investment and take strategic views on things that perhaps won’t come to fruition for several years.”
In terms of scalability, the purchase increased P3’s total portfolio in Spain more than fivefold – to around 4 million square feet. P3 now manages 38 million square feet of logistics assets across Europe in addition to a land bank of around 18 million square feet.
Worboys noted that logistics is “100 percent mainstream now, rather than an alternative.” Historically, the retail sector always used to rank first in terms of 10-year returns. However, over the past decade, the warehouse sector has overtaken retail as the number one performer, given significant growth in values and income streams, he added, citing CBRE data.
Worboys said he believed that the Spanish economy is expanding and the firm had identified the country as one of its key targets for 2017. P3 said its next target was to increase its presence in the Mediterranean corridor, around Barcelona and Valencia and then expand south to Malaga. The focus was to acquire institutional-quality logistics assets and off-market deals.
The portfolio deal was significant because it was also one of P3’s largest-ever transactions in Spain and one of the largest portfolio transactions in the country in recent years. But the acquisition held further importance because it marked the firm passing its standard ‘AUM tipping point’ in a given market.
“We already owned five assets in Spain and we put a team in about a year ago,” said Worboys. “If you are going to have an office in a certain country, you need scale. This deal has allowed us to build up our scale in Spain to well over 4 million square feet – and we feel the tipping point is at around 3 million square feet.”
With new owners on board, it is understood P3 will be expanding its already considerable European reach into hitherto untapped markets, particularly the UK.
“We sat down with GIC and reviewed the European countries in which we have yet to invest in – such as the UK, the Nordics, Hungary and others – and within the next month or so we will be ready to unveil our new strategy,” said Worboys.