APG and PGGM back AEW Europe logistics fund

Dutch pension groups APG and PGGM are among investors backing AEW Europe’s Logistis fund to the tune of €820m.

AEW Europe said the capital raising, which takes the vehicle’s total equity to more than €1.3bn, is the investment manager’s largest to date.

Institutional investors from Europe and Asia, also backed the strategy, AEW said.

Dirk Bootsma, PGGM’s investment manager for private real estate in Europe, said the Logistis fund, which will build grade-A logistics parks, fits well with PGGM’s Private Real Estate Fund.

“This investment will give us immediate access to a low leveraged and well diversified portfolio of prime logistics assets in core locations,” he said.

Bootsma said Logistis is well positioned to benefit from opportunities currently available in the market.

APG, meanwhile, said it is attracted to the fundamental prospects of the logistics sector in Europe.

Max Remmers, senior portfolio manager of real estate, said the growth of e-commerce, supply-chain reconfiguration and globalisation will fuel occupier demand in a market “still undersupplied” by modern stock.

The investor said it decided in 2010 to increase its exposure to logistics as part of its European strategy.

”Our main focus has always been to invest in high quality portfolios on strong locations that have the capacity to generate strong and sustainable cash flows,” Remmers said.

AEW Europe said the capital raised exceeded the fund’s original equity target, with the five largest new investors committing more than €600m. Existing investors also increased their investments, committing €130m.

The fund manager plans to grow the Logistis platform to more than €2bn and is targeting a net 7% income return for the fund. The current portfolio comprises 21 assets in France, Germany and Italy, Spain and Belgium, worth around €900m.

AEW Europe’s fund raising comes at a time of increased interest in Europe’s logistics and industrial sector.

Speaking to IP Real Estate this week, Richard Gwilliam M&G Real Estate head of property research, said the European logistics sector was currently a medium-term investment opportunity.

”The rise of e-commerce and above average manufacturing utilisation is driving occupier demand,” he said.

The firm sees the Nordics and central and eastern Europe regions as areas likely to enjoy a “rebound” next year.