EXCLUSIVE: Interview with Brookfield's European MD

Brookfield's managing director for Europe David Brush details the company's strategy following its acquisition of logistics specialist Gazeley.

Brookfield Property Partners, with $90 bn (€69 bn) of real estate assets, will seek to establish office and retail platforms on the Continent in the future in a bid to build a foothold in Europe.

'Gazeley will be our main operational platform for logistics in Europe but we want to diversify further on the Continent,' David Brush, Brookfield’s managing director for Europe, told PropertyEU in an interview.

Brush, the former chairman of RREEF's global opportunistic property business, was hired in the summer of 2012 to lead the group’s real estate investment business in Europe.

Earlier this month, Brookfield closed the acquisition of UK-based logistics developer Gazeley from Economic Zones World (EZW), a subsidiary of Dubai World, following the signing of a memorandum of understanding in December last year.

Middle Eastern investor EZW had hired Citibank in mid-2012 to market Gazeley. Market sources say the group was looking for a quick sale as part of plans to restructure its major pile of debt.

Brookfield is understood to have paid a discount price of £300 mln for Gazeley, roughly £100 mln less than the price paid by Dubai World's EZW back in 2008, when it bought the UK-based developer from US retail gaint Walmart.

The company declined to provide financial details on the deal, which represents its first operation in mainland Europe.

'In the future we will be looking for additional platforms in the retail and office sectors,' Brush said. 'We are actively pursuing new investments. This is an interesting time for investing in Europe because values have definitely come down since the peak, and we think that there are good companies that still require further restructuring. We are getting an opportunity to buy assets at good prices, and benefit from recovery three or four years down the road.' The company will be looking at both listed and unlisted companies, he added.

Gazeley’s portfolio of large-scale logistics warehouses and distribution centres currently totals 524,000 m2 of lettable space. The company also holds a substantial land bank of 1.3 million m2 with a further 1.1 million m2 held under option agreements.

Brookfield will seek to expand Gazeley's business both through internal development and acquisitions. 'We have fresh capital to develop the land bank and build a stronger, more competitive position for Gazeley in Europe,' Brush said, commenting on the group's plans for the logistics arm. 'We also think there is an opportunity to acquire assets from other distressed owners on an attractive basis,' he added.

Logistics is one of the group's favourite asset classes, he noted. 'It has a very high income yield, unlike office and retail which have both recovered some ground in terms of yield compression, while logistics yields remain quite high. We also like the sector's dynamics because there is a lot of demand coming from companies re-engineering their supply chain. This is demand to replace existing facilities which no longer meet tenants' needs in view of the current environment and market trends such as growth in e-commerce. This demand is not dependant on the economy - which lacks growth drivers - but is linked to structural changes in the industry.'