Starwood-M7 JV swoops on €259m of industrial assets across Continent

MStar Europe, a joint venture between London-based M7 Real Estate and Starwood Capital Group, has acquired 613,000 m2 of light industrial property located mostly in France, Germany and the Netherlands for a total €258.7 mln.

The acquisitions represent over half of MStar Europe’s targeted €500 mln investment programme in Europe. The joint venture was established in April this year with the aim of building up a sizeable presence in the European light Industrial sector. It follows on from MStar, the UK-focused vehicle that Starwood and M7 Real Estate launched in June 2013 which has acquired £70 mln worth of properties to date.

In total, MStar Europe has acquired 55 properties in five Western European countries through portfolio transactions and a buy-out of the listed Tamar European Industrial Fund (TEIF).

The buyout offer for TEIF, which was accepted by a majority of shareholders in early August, valued its portfolio of 36 properties in Belgium, France, Germany, the Netherlands and Sweden at around €130 mln. The fund is to be delisted from the London Stock Exchange next month.

MStar Europe has also acquired 10 warehouses in the Netherlands from Rockspring for €71 mln. The properties are located in the Randstad region encompassing the largest Dutch cities and comprise a total of 153,000 m2 of space.

In Germany, the JV has purchased five light industrial properties from a fund advised by Valad for €44.7 mln. The five properties are located in Frankfurt, Pulheim, Stelle and Ratingen (two assets). The deal is MStar Europe's first in Germany.

Continental spree
Richard Croft, CEO of M7 Real Estate, commented: ‘We set up MStar Europe to seize the opportunities that we identified in Continental Europe to assemble a portfolio of high-yielding multi-let assets, some of which require active and creative management. The speed with which we have deployed capital validates that strategy. We continue to see Germany as a particularly attractive market for our value-add or opportunistic approach to investment.’

Adam Shah, senior vice president at Starwood Capital, said: ‘These transactions are a continuation of our successful platform in the United Kingdom in acquiring light industrial real estate. These assets have strong existing cash flows in place and we expect to drive additional value to the portfolio through our shared expertise in managing these assets.’

M7 Real Estate is a pan-European specialist investor and asset manager with a portfolio of more than 260 assets comprising 1.9 million m2. Its joint venture partners include Oaktree Capital Management, Starwood Capital, HIG Capital and M&G Investments.

Starwood Capital Group is a US private equity firm which has built up a global $36 bn portfolio across all asset classes since its inception in 1991. The company is also active in real estate financing and loan servicing. In Europe, the firm has so far been active primarily in the hotels and property debt sectors.