M&G Real Estate’s European property fund has extended its exposure to the German logistics market with the acquisition of a 40,000sqm warehouse for an undisclosed sum.

M&G European Property Fund acquired the fully-let asset in Karlsruhe, increasing its exposure to the logistics market to €415m.

Thomas Kaechele, the head of M&G Real Estate in Germany, said: “German logistics assets are in strong demand at present, which is leading to higher pricing and expectations of significant rental growth over the next five years.

“Due to its strategic location in southwest Germany, Karlsruhe plays an important role as a hub for CEP (courier express parcel) and logistics services to the important regions of Rhine-Main (Frankfurt), Rhine-Neckar (Mannheim/Ludwigshafen) and the Stuttgart region. It is also an important location for logistics services to France and Switzerland.”

Simon Ellis, the fund manager at M&G Real Estate, said: “This investment extends our exposure to the German market and the logistics market in particular, following a busy year for the fund across all main property classes.

“This asset provides an attractive income yield and underlines our strategy to acquire assets which provide long-term potential for creating further value.”