Boreal IM, a new London-based investment manager backed by Canadian pension fund OTPP, has €1.5 bn of dry powder to invest in European logistics property opportunities over the next couple of years, according to CEO and founder Louis-Simon Ferland.
Ferland, a former Blackstone real estate executive who helped the US asset management giant build up its Logicor logistics platform, founded Boreal IM last year together with former colleagues Nikos Koulouras, James Farmer and Peter Bingel. The firm has since hired a further 20 staff and opened offices in Paris and Rotterdam. It also landed an investment mandate from the Ontario Teachers’ Pension Plan (OTPP) real estate subsidiary Cadillac Fairview, with the joint venture aiming to assemble a €3 bn pan-European logistics portfolio.
‘We looked at different ways of funding our new business at the time, and one way was to raise discretionary capital,’ Ferland explained. ‘OTPP wanted to come back to Europe and start a business here, with a focus on logistics, residential and life sciences. They were looking for a pan European investment platform and also an investment partner that could invest across the risk spectrum, at the same time we were launching our business. They showed a lot of trust in us by committing €1 bn of equity and on our side, we are committed to them on an exclusive basis for logistics real estate investment and in the mid term we expect to expand into other adjacent asset classes such as data centres or battery energy storage facilities, for example.’
Under the joint venture, Cadillac Fairview and OTPP agreed to put in the majority of the investment capital while Boreal is a minority investor and acts as investment and asset manager. OTPP is also a shareholder in the investment management company, according to Ferland.
Boreal IM made its debut investment in May last year with the acquisition of the Nucleus Estate in Park Royal, West London and an estate within the Port of Rotterdam for a combined amount of €250 mln. The acquisitions comprised a total of 1.1million ft2 (109,000 m2) of logistics space. Then, at the end of 2022, the firm bought a further three warehouses in the UK for £145 mln. ‘We saw an opportunity to invest by acquiring assets from UK retail funds which needed to raise capital,’ commented Ferland.
Over the past year, the company has made a number of selective investments working with vendors in need of liquidity. It entered several large European markets – France, Spain, Italy and Germany - assembling a portfolio of nearly 800,000 m2 of space. It currently has around €1.3 bn of GAV properties under ownership or exclusivity, according to Ferland.
Looking ahead to 2024 and beyond, the manager says the company will continue to focus on deals between €20 and €200 mln in its core European markets (UK, France, Germany, Italy, Spain and the Netherlands) to try to build more scale. Ferland: ‘Generally the other European markets tend to be fairly small. Also, we find that we are a better manager of assets if we have people on the ground. We now have an office in France, the UK and the Netherlands and we would want to have an office in Germany and Italy as well.’
He sees two main investment drivers for the firm going forward. One will ‘definitely’ be the need for liquidity by some players which are in financing difficulties. The other major driver will be related to ESG and the future-proofing of assets. ‘This trend in particular has accelerated extremely over the last two years and everyone is trying to get their head around it,’ Ferland noted. ‘A lot of institutional owners are concerned about owning some of these older assets, while we know what it takes to transition these assets from brown to green. I believe this will bring another interesting set of investment opportunities.’
Alongside logistics, Ferland says the firm is also researching logistics-adjacent sectors for potential investment, with a specific focus on sectors with tailwinds. ‘We would want something that is pan-European, that is granular and that we can help institutionalise,’ he explained.
Amongst sectors under consideration, battery energy storage is an example of what could fit the bill. ‘We were looking at an asset in the Netherlands where we would like to put EV charging and PV panels but there was no capacity on the grid. This is not the first time it happened to us and it led us to the idea of battery storage,’ he explained. ‘Storage is too granular to interest big asset management groups like Blackstone for example. But it could be a right fit, given the granularity of the asset class and it would allow us to roll out our strategy over Europe.’
