Accelerating logistics rental growth and yield compression in Central and Eastern Europe (CEE) are driving strong growth at listed regional specialist CTP.
Remon Vos, CEO of CTP which listed last March, said the logistics developer/investor is seeing the strongest rental growth and fastest yield compression of all in its biggest market, the Czech Republic. ‘Yields are compressing to record low levels around Europe, and in the CEE the further west, the larger the compression. On transactions in Prague they are circa 75 basis points lower than a year ago, at 4%’, he said.
Recent CTP lease agreements in the Czech Republic show rents are 10% higher than recorded at the beginning of 2021.
Vos said he expected the average yield across the whole of CTP’s 7.1 million m2 portfolio to tighten by ‘at least an average 50bps’ when the assets are revalued for the December 2021 year end.
The group reported a 92% leap in profits for the first nine months (YTD to 30 September 2021) to €317.8 mln.
CTP’s market share in its core markets of Czech Republic, Slovakia, Hungary and Romania continues to creep up and now stands at 25.4%.
It also operates in Poland, Austria, Serbia and Bulgaria and this year expanded in the Netherlands where it bought Amsterdam Logistics Hub for €307 mln and 360,000 m2 of land adjacent to Schiphol Airport.
Last month, CTP made a strategic move into Germany in a value-add play, announcing an €800 mln, proposed takeover of Deutsche Industrie Reit. Vos said the price reflects a yield of 5.3% on the German investor’s assets compared to the 3% achieved for prime logistics in that market.
The average rent in Deutsche Industrie’s portfolio is €37 per m2. Prevailing logistics rents in Germany are double that, at closer to €70-€75 per m2. ‘Deutsche Industrie’s business model was to be an accumulator with a small team,’ he said. ‘They have 12 people managing 89 assets in 81 locations. I think the current CEO and 30% shareholder would probably say that the company is under managed.’
At €1.8 bn, CTP has a high level of liquidity, partly due to its most recent, €1 bn issuance in its green bond programme. ‘A substantial part is for our development pipeline in 2022,’ Vos said, adding the company expects to build more than 1 million m2 of gross lettable area next year and maintain a high average yield on cost of 10%+.
The company will add circa 1.4 million m2 of GLA in 2021 of which about two-thirds is development and one-third is from buying bolt-on assets.
