Singapore's sovereign wealth fund GIC has signed a definitive agreement to acquire logistics specialist P3 from TPG Real Estate and its partner Ivanhoé Cambridge for €2.4 bn, P3 announced in a press release this morning.
P3 claims the deal, which is subject to regulatory approval and was revealed in early October by EuroProperty, is the largest European real estate transaction this year. GIC won over 'several' different bidders from all over the world, P3's CEO Ian Worboys said in a telephone interview. Like GIC most of the other bidders were institutional investors.
Worboys added that the company was 'thrilled' to partner with one of the world's largest sovereign funds. 'With the backing of TPG Real Estate and Ivanhoé Cambridge we have been able to significantly expand across our core territories, become a market leader, and create a clear differentiation as a customer-centric business. We look forward to delivering the same success for our new shareholder. GIC’s long-term investment strategy is closely aligned to our own approach, as a long-term owner and developer of high quality assets.'
According to UK property media reports, GIC faced competition to close the deal from both Canada Pension Plan Investment Board and Australia’s Macquarie.
Three-to-five year window
TPG Real Estate and Ivanhoé Cambridge acquired P3, which owns, develops and manages logistics properties across Europe, in October 2013. The North American investors had indicated at the time that they had a three-to-five year window, Worboys pointed out. 'This deal is right on the nail.'
He added that the deal by the world's biggest institutional logistics owner also reflected the continued strength of the European logistics sector. '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.'
Under its North American parents, P3 has since grown into one of Europe’s largest fully integrated logistics platforms and developers with a 3.3 million m2 portfolio. 'TPG and Ivanhoe Cambridge brought more institutional money into the company, but they also helped improve our financial and internal systems,' Worboys noted. 'They really helped us grow up.'
Anand Tejani, Partner at TPG Real Estate, said: 'P3 is a good example of our platform-based investment strategy, and we are very proud of what we have accomplished together. Under our ownership, the business has undergone a period of significant change, growing to be one of the leading fully integrated logistics platforms in Europe. P3 has more than doubled in size and has strengthened its asset management, property management and development capabilities. We believe P3 will be well positioned to continue its growth under GIC’s ownership.'
Portfolio has doubled in size
Over the last three years, P3 has completed a series of add-on acquisitions in key European markets, more than doubling the size of the portfolio, which now includes 163 high quality warehouses, in 62 locations, across nine countries. At the same time, the group has increased its customer base threefold, demonstrating the strong and growing demand for premium logistics space.
Last month P3 announced it had completed a €1.4 bn long-term refinancing with a group of leading international financial institutions including Morgan Stanley, Pbb and UniCredit Bank.
The facilities include a deal for Western Europe and Poland, fully underwritten by Morgan Stanley, with Pbb acting as agent. In the Czech Republic and Slovakia, an arangement was made via a club of five Czech and Slovak banks; CSOB, which acted as the agent, CSOB Slovakia, Komercní Banka, UniCredit Bank, and Ceská Sporitelna. CSOB is part of KBC Group, Komercní Banka is part of Société Générale Group, and Ceská Sporitelna is part of Erste Group.
P3 currently has a land bank representing up to 1.4 million m2 of development potential. Currently, 11 new sites are under construction, with 300,000 m2 of approved development scheduled by the end of the year. 'We can do the same, if not more, next year,' Worboys said. 'We plan to build upon the P3 brand.'
Under GIC, Worboys expects P3 will continue to do 'more of the same'. 'GIC bought us to grow. They're a long-term investor and they plan to stay on board for 10 or 20 years if not longer. Maybe they'll stay forever!'
Another string to GIC's bow
The P3 platform adds another regional logistics string to GIC's bow. In December 2014, the Singaporean investor teamed up with Singaporean-listed Global Logistic Properties to enter the US market in a $8.1 bn deal. The platform was acquired from companies affiliated to the Blackstone group. GLP already had an established logistics platform in China, Japan and Brazil.
The deal is expected to close by the end of 2016. CBRE advised GIC while Eastdil advised on behalf of P3.
