EQT Real Estate has completed an additonal six transactions in Sweden this year as it seeks to build out a portfolio of up to €480 mln for a country-specific logistics joint venture.
In July 2019, EQT Real Estate came together with Swedish property company Kvalitena and Broadgate Asset Management to launch Svenska Verksamhetsfastigheter, a JV focussed on warehouses and light industry properties in city-centre locations.
Since then, Svenska Verksamhetsfastigheter has executed on an ambitious buy and build strategy. So far this year, it has acquired both portfolios and smaller unit transactions, the majority of them sourced off-market.
The partners now have a portfolio under management comprising 174,000 m 2 across 28 logistics assets in university cities in central and southern Sweden.
EQT's rationale is playing out as expected given the rapid pace of urbanization and demographic growth placing new demands on cities’ urban landscapes.
'An uptick in population and continuous development of new residential areas and big box retail centres have over time resulted in a reduction of warehouse facilities in close prolixity to urban areas,' said the group.
'The scarcity and demand of this asset class is only expected to grow further as the increased shift to e-commerce calls for last mile logistics and faster shipping to end-customers,' it added.
EQT’s real estate team in Stockholm has tapped into the need for urban logistics properties that is particularly high in Swedish university towns due to strong tailwinds with regards to economic growth and demographic development.
Henrik Orrbeck, partner at EQT Real Estate, said, ‘The demand for urban logistics properties is fuelled by the exponential growth in e-commerce and we see this thematic trend impacting cities all across Sweden and in university towns in particular.’
He added, ‘Svenska Verksamhetsfastigheter’s portfolio is expected to benefit from the increased pace of urbanization to these city clusters and the company is targeting a total portfolio value of SEK 4-5 bn ( €380 mln- €480 mln) within the coming two or three years.’
Richard Wollter, CEO at Broadgate Asset Management, said, ‘We continue to implement the strategic business plan, which includes building an attractive last mile logistics platform and refining the portfolio through active leasing work. We are continuously reviewing the market for potential additional acquisitions in the clusters in which Svenska Verksamhetsfastigheter operates. The transactions conducted in 2020 consist of both portfolios and smaller unit transactions, majority of them sourced off-market.’
European expansion
The update comes hot-the-heels of news concerning EQT's expansion in France. In June, the private equity firm announced the opening of a Paris office and hiring of former Colony Capital professional Sébastien Morizot to lead its real estate investment strategy in the country.
Morizot, who joined EQT Real Estate as a director, brings more than ten years real estate experience in the French and European markets. At EQT, he is focussing on value-add real estate projects to create long-term institutional assets. The company's new Paris office includes 10 investment advisory professionals headed by Nicolas Brugère. For more information click here.
EQT's real estate group has hired a number of well-known country heads within the last 12 months.
According to the firm’s website, Alessio Lucentini joined as MD and head of Italy in August 2019 having formerly served as head of asset management and transactions in the country for AXA Investment Managers.
Alexander Strassburger joined as MD and head of DACH and Benelux, formerly being cohead of investments at AEW. Carlos Molero, MD and head of Spain, joined in Madrid having been head of sourcing and acquisitions at Activum. Meanwhile, Eric Lemer joined as MD and director of business development from Delancey Real Estate and prior to that, advisory firm Hodes Weill & Associates.
Fundraising progress
EQT has recently reached an advanced stage in fundraising for its second dedicated vehicle, EQT Real Estate II. The company is close to achieving the hard cap of €1 bn for Fund II according to sources, easily surpassing a target of €750 mln.
A first close was held on more than €500 mln in May 2019, already beating the size of Fund I, which closed on €420 mln in 2017.
According to public documents available last year, investors in the latest value added strategy include the Teacher Retirement System of Texas and Maine Public Employees' Retirement System. Further blue chip limited partners who have committed capital since then include the Houston Firefighters’ Relief and Retirement Fund.
The Teacher Retirement System of Texas has committed €100 mln alongside €150 mln of coinvestment capital, while Maine has invested around €50 mln. The Houston Firefighters’ Relief and Retirement Fund has allocated €30 mln.
IPO
EQT was founded in Sweden in 1994 and employs over 700 people in 16 countries across Europe, APAC and North America. It has approximately €40 bn of AUM across private capital, real assets and credit, and is said to be Europe's second largest private equity firm.
Last September it held a successful IPO upon the Nasdaq Stockholm Stock Exchange.
Additional reporting by Robin Marriott
