Q3 DEALS: European logistics sector on course to deliver record volume

Logicor's €500 mln acquisition of Immofinanz's logistics platform is one of the latest signs that the European logistics property sector is well on its way to smashing the €20 bn investment record for the second year in a row.

TOP EUROPEAN LOGISTICS AND INDUSTRIAL PROPERTY DEALS
First nine months of 2015

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1. NREP closes €650m logistics sale in Nordics
2. Logicor buys portfolio of 19 logistics sites from Goodman
3. Hansteen sells UK industrial package for €268m
4. SLI property club deploys €300m across 5 deals in Europe
5. Segro and M&G to dissolve Heathrow big box JV
6. AEW Europe buys €150m Czech park for new logistics fund
7. Hansteen boosts stake in UK industrial fund
8. Tritax splashes out €125m on regional distribution centre
9. Norwegian investor bags €120m Finnish logistics package
10. Cerberus to buy Unicredit’s Levia package at 50% discount

Source: PropertyEU Research
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The acquisition on 2 November by Logicor, Blackstone's European logistics property investment business, also highlights how investors are becoming increasingly comfortable with investing large volumes outside the big three markets of the UK, Germany and France.

Immofinanz's logistics assets are located in Germany and Central and Eastern Europe. The portfolio consists of 36 completed assets offering 1 million m2 of rentable space in Germany (24 properties), Hungary (5), Romania (3), Poland (2), Slovakia (1) and Russia (1), as well as three development projects with 65,000 m2 currently under construction in Hamburg and in the Romanian cities of Bucharest and Ploiesti.

The 'Big Three', plus Sweden, remain at the epicentre of European logistics investment, and accounted for 75% of the €10 bn volume recorded in the first six months of the year. If this level of activity continues into the second half of the year - and deal data suggests this is likely - the record volume of €21 bn could be surpassed. The sector saw over €17 bn of investment in 2013.

The largest deal by volume this year took place in Sweden, Finland and Denmark as four Danish pension funds paid €650 mln to acquire 650,000 m2 of leasable space from fund manager NREP.

Logicor and the core markets of Germany and France feature in second place in PropertyEU's ranking of the top logistics and industrial transactions in the first nine months of 2015. In this deal, Blackstone's platform acquired the 19-asset Shine portfolio in France and Germany from Goodman European Logistics Fund for an estimated €300 mln.

The third largest investment deal involved UK REIT Hansteen selling a multi-let industrial property portfolio in the UK for €268 mln. The buyer was a fund advised by US-based Brockton Capital in partnership with Dunedin Property.

Big-ticket deals are also occurring in other markets with greater frequency. During Expo Real in October, IDI Gazeley, the logistics platform owned by Brookfield, moved into the Netherlands with the purchase of 13 warehouses from Dutch real estate fund Eurindustrial. The Parcival portfolio is spread around the country with a total area of more than 190,000 m2. IDI Gazeley said it would form the core of a growing Dutch logistics platform.

In mid-October, CBRE Global Investment Partners (GIP) completed the acquisition of a €350 mln European logistics portfolio, comprising seven assets across France, Germany, the Netherlands and Spain.

Scarcity of prime warehouses
BNP Paribas Real Estate said during Expo Real that the scarcity of prime warehouses was affecting both occupier and investment markets in Europe.

Economic uncertainties still impact on speculative developments, meaning the development pipeline is too thin to offset the structural lack of new supply after several years of crisis. At the same time, sustained strong for logistics is leading to bidding wars on a European scale, pushing yields down.

Prime yields contracted in all the main European markets in Q3, reflecting stronger demand in the letting markets and limited prime availability. Apart from Portugal, Spain and Italy, prime yields are nearing their lowest point in most European countries. They dropped well below 5% in the UK and in the main German hubs (5.55% in Munich). They reached 6.20% in Amsterdam, 6.25% in Stockholm and 6.35% in Paris, whilst they bottomed out to 6.75% in Ireland and the Czech Republic.

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BY CORMAC MAC RUAIRI
Deals editor, PropertyEU