European investor and asset manager M7 Real Estate has assembled a £300 mln (€340 mln) portfolio of 19 retail warehouses following the full deployment of capital raised across its M7 Box+ I and M7 Box+ II funds. Both funds, which were launched in H2 2020, focus on carefully selected UK retail warehouses with potential for future rental and capital growth, through asset management and an anticipated re-pricing of the asset class as the logistics function of these properties in the last mile delivery chain grows.
A total of £130 mln of equity was raised across the two funds, derived from a mix of global high net worth, family office and institutional investors, while M7 also established new borrowing relationships on behalf of the funds with Aberdeen Standard Investments and Apollo. A loan facility of £26.15 mln was agreed with Aberdeen Standard Investments for M7 Box+ I and £137.8 mln was agreed with Apollo for M7 Box+ II.
M7 Box+ I comprises 10 assets with a total area of 413,500 sq ft (38,400 m2), while M7 Box+ II, the larger of the two funds, has nine assets with a total area of circa 1 million sq ft. The portfolios are spread across the UK, providing income and value diversification by both tenant and geography, although Box+ II has a bias towards the South East where the supply / demand pressures are more acute due to land availability.
'We believe that retail warehouses are one of the most interesting UK real estate asset classes at the moment, especially given the current pricing dislocation in this segment as the rental arbitrage between last mile logistics and retail warehousing narrows,' said David Ebbrell, CEO at M7. 'Despite perceptions, occupier demand for well-located space with deep residential catchments remains robust seeing over 700 new store openings in 2020. Retail warehouses will play an important role as part of the omnichannel retail landscape, especially for click and collect, last mile logistics and retailer returns, given their convenient locations in urban areas where space is extremely constrained. We are of the view that demand is only set to grow.'
