Prologis Europe acquires €555m of logistics in Q3

Prologis Europe acquired 700,000 m2 of logistics space for €555 mln during the third quarter of 2014.

The investment total was revealed as the parent company, Denver-based Prologis, announced its third-quarter results.

The European property acquisitions were focused on the UK, Central and Eastern Europe and Northern Europe. An additional 52 hectares of land were also acquired.

The deals were in line with Prologis Europe’s strategy of investing in global markets in a 'disciplined and prudent manner, taking into consideration location, functionality and quality', according to Philip Dunne, president of Prologis Europe.

'Investors recognise that the European logistics market provides compelling return opportunities,' Dunne said. 'We have seen capitalisation rates compress for the sixth consecutive quarter, but logistics property yields remain well above their previous cycle peak.'

Prologis Europe ended the third quarter with 93.5% occupancy, an increase of 90 basis points over the previous quarter. The company leased 975,700 m2 across its 14.1 million m2 portfolio.

Demand continues to be driven by reconfiguration of the supply chain, trade and e-commerce. 'Operating fundamentals are stable to improving, as new supply remains limited,' Dunne said. 'Rising seasonal demand has led to a strong quarter for leasing activity and a significant uptick in our overall occupancy levels.'

Supply of Class-A distribution facilities remains low across all European markets. In the third quarter, Prologis Europe initiated four developments in the Netherlands, the UK and Spain totalling 105,700 m2. 'We continue to selectively increase our development activity in the UK and Northern Europe, where rents have reached replacement costs,' Dunne said. 'Slower growth recovery markets in Southern and Central Europe, on the other hand, provide opportunities for accretive acquisitions that complement our existing portfolio.'