Donald Trump was not the only high-profile real estate personality to crow victory this week.
Over in Europe, P3’s CEO Ian Worboys was audibly elated to announce that Singapore's sovereign wealth fund GIC has signed a definitive agreement to acquire the logistics specialist that he heads from TPG Real Estate and its partner Ivanhoé Cambridge for €2.4 bn. P3 claims the deal, which is subject to regulatory approval and was revealed in late September by Estates Gazette, is the largest European logistics transaction this year.
GIC won over ‘several’ different bidders from all over the world, Worboys told PropertyEU in a telephone interview earlier this week. The deal with the Singaporeans puts his company firmly on course for a new phase of growth and adds another regional logistics string to GIC’s bow.
The European coup follows a deal in December 2014 when the Singaporean investor teamed up with Singaporean-listed Global Logistic Properties to enter the US market in a $8.1 bn deal. That platform was acquired from companies affiliated to the Blackstone group. GLP already had an established logistics platform in China, Japan and Brazil.
Student housing coups
GIC has also been on a winning streak in Europe in recent months. Just days after acquiring a major UK portfolio in late September, Singapore’s sovereign wealth fund announced another major student housing deal with global specialist GSA, this time in Germany.
As for GIC’s new logistics platform, the takeover by the world’s biggest institutional logistics owner reflects the continued strength of the European logistics sector, Worboys noted. ‘There are still years of growth in the market and more rental growth to come. I think we may see some additional small yield compression.’
In addition to logistics and student housing, GIC has built up an interest in German offices via a 12.7% stake in Alstria Office REIT. But GIC is by no means the only global investor to spot potential in the German office sector. A day after the P3 deal, it emerged that Blackstone Real Estate Partners IV has agreed to acquire all shares in OfficeFirst Immobilien, the German office platform of Bonn-based real estate company IVG Immobilien.
A new twist in the OfficeFirst saga
Blackstone's fund paid around €3.3 bn for the portfolio and its underlying platform, according to someone close to the deal. That would make it the biggest European property deal of the year. ‘Blackstone approached IVG after they shelved their plans to float OfficeFirst,’ an analyst, who asked not to be identified, told PropertyEU. ‘It all happened very quickly – the deal was done in less than two weeks.’
Blackstone and IVG declined to comment. However, the latest twist in a protracted saga has surprised many in the industry, not least because Blackstone was in talks with IVG just two months ago to acquire the portfolio, before the talks broke down. Shortly afterwards, IVG announced that it planned to list its OfficeFirst portfolio on the Prime Standard of the Frankfurt Stock Exchange.
At the time, IVG said that the IPO would consist of new OfficeFirst shares amounting to €450 mln as well as stock owned by IVG. The proceeds were to be used to repay debt and cover part of the conversion cost of turning the company into a REIT next year. The planned IPO was postponed a month later, with IVG citing ‘negative market developments’.
An inevitable deal
The deal was ‘inevitable’, according to one Frankfurt-based analyst, who asked not to be identified. ‘If you look at the portfolio, you can see that it’s not ready for an IPO because of the all the capex requirements,’ he said. ‘Blackstone is one of few players who can provide that. It already owns several offices in Germany and OfficeFirst provides Blackstone with a platform to group them all together. I would expect Blackstone to clean the portfolio up and then take it public.’
Blackstone has not signalled whether it intends to uphold the conversion to REIT status.
What is clear is that the addition of the OfficeFirst portfolio marks yet another European property victory for the US alternative assets giant. In addition to the 1.8 mln m2 German offices portfolio, it owns a substantial retail and logistics portfolio throughout Europe.
Even before their recent winning streaks, Blackstone and GIC had already become beacons for the European property sector. Investors seeking opportunistic deals or new growth markets follow Blackstone's every move while GIC's strategy is a shining light for what institutional investors may be interested in next.
The big question following Trump’s coup this week is whether the new president of the US can be the same for his country – and the rest of the world.
Judi Seebus
Editor in Chief PropertyEU
