Delin to use leverage for new buying round

Jersey & London-based Delin Capital Asset Management is close to refinancing its €150 mln logistics property portfolio in the Netherlands to fund a new round of acquisitions.

The 50% leveraging will release some €75 mln, and this will be added to the €20 mln left over from the €200 mln raised by Delin mainly from Eastern European private investors for its inaugural fund, Capital Preservation Portfolio I. The fund’s target size with 50% leverage is around €400 mln.

CEO Christian Jamison told PropertyEU that the firm was now looking to leverage its first acquisitions, and had recently carried out a ‘beauty parade’ of Dutch and German banks. This resulted in a preliminary agreement with a German financier, with due diligence taking place in the weeks after Expo Real.

Jamison said that the €95 mln will be used to buy unleveraged in its target markets, the UK, Netherlands and Belgium. ‘We will acquire assets until we build up another mini portfolio and then we will leverage that and buy leveraged after that,’ he said. ‘By then I hope we will have a Dutch facility and a UK facility. We will probably look to fold assets into the existing facilities or arrange fresh financing.’

Delin’s CEO said that the debt markets are improving and finance pricing has come down. One of the fund’s investors has suggested providing a bridging loan if that is required. Delin hopes to have finalised the acquisition programme for the fund by the middle of next year. ‘By then we should have between €375 mln to €425 mln of assets, dependant on the leverage terms.’

Jamison said the fund was underweight in the UK, but Delin is still keen on the Dutch market. So far, CPP I has not found ‘the right assets at the right price’ in Belgium. In September 2013, the fund acquired a 20,00 m2 distribution warehouse in Manchester in the UK for €15 mln. Two months earlier Delin completed the acquisition of two distribution warehouses in the Dutch markets of Tilburg and Eindhoven for a total of €80 mln. The CPP I fund had previously acquired other assets in Eindhoven, Born and Waalwijk.

Jamison noted that enormous competition for logistics has had a significant effect on pricing, particularly in the UK. Noting also that Blackstone’s LogiCor recently entered the Dutch market with a big deal, Jamison added. ‘We may see the same pricing shift in the Netherlands. The Netherlands is a thinner market with less competition but I feel this is increasing as many people want to invest in defensive assets such as logistics.’