European logistics specialist Valor Real Estate Partners (Valor) is joining forces with Canada’s QuadReal Property Group (QuadReal) to invest €1 bn in urban logistics assets located in key UK, French and German cities.
QuadReal will be the majority investor in the JV, which will have initial capital commitments of €440 mln that will provide, with leverage, in excess of €1 bn of investable capital. Valor, the minority investor, will be responsible for sourcing and managing the portfolio, leveraging its significant experience acquiring, developing in-house and managing infill logistics assets.
Launched against the backdrop of the Covid-19 pandemic, the operation underlines the continued appetite of investors for exposure to the European industrial sector and specifically urban ‘last mile’ logistics, a sector which has benefitted strongly from accelerating e-commerce growth in response to changing consumer behaviour, according to Valor’s managing partner Christian Jamison. ‘During the pandemic the occupational market proved to be very resilient, and investors have recognized that logistics is one of the best positioned sectors,’ Jamison told PropertyEU. ‘There remains a critical shortage of warehouse space in major metropolitan areas close to the necessary infrastructure to meet occupiers’ requirements, an imbalance that is growing as a result of both near term drivers, such as Covid-19, as well as long term drivers, such as urbanisation. It remains however a highly fragmented and granular segment of the industrial market which requires strong local expertise as well as technical skills, which we have demonstrated over the years in building our current portfolio.’
Employing a value-add and develop to hold strategy, the JV will focus primarily on ‘last-mile’ logistics assets located in the greater metropolitan areas of London, Paris and Berlin, with a secondary focus on major UK and EU gateway cities, such as Manchester, Lyon and Frankfurt.
The JV is mandated to acquire properties across the risk spectrum, including stabilised assets, vacant or short income assets with significant repositioning potential, as well as ground-up development sites, to generate attractive risk adjusted returns.
The venture is expected to more than double Valor’s €1 bn portfolio consisting of 75 assets largely located in the highest barrier-to-entry markets of London and Paris. Amassed on behalf of two global institutional investor mandates, AIG and another undisclosed US investor, Valor’s European urban logistics presence currently totals 6 million square feet in Europe.
It will also significantly increase Valor’s presence in Germany, where the firm currently manages three assets. ‘Germany will be a major growth area for the business moving forward,’ said Jamison, who founded Valor together with KSH Capital back in 2016 to invest in logistics and industrial real estate across Europe.
Jay Kwan, managing director Europe of QuadReal, said that he was ‘incredibly excited to be partnering with Valor’. ‘Urban logistics is one of our highest conviction strategies globally given the e-commerce growth that has accelerated rapidly as a result of Covid-19 and which is forcing businesses of all shapes and sizes to ensure their distribution networks are fit-for-purpose. Valor is a fast-growing platform with proven capital deployment capabilities, and this new venture continues our strategy of working with best-in-class real estate partners with exceptional track records of generating strong returns.’
Headquartered in Vancouver, Canada, QuadReal Property Group is a global real estate investment, operating and development company. QuadReal manages the real estate and mortgage programs of British Columbia Investment Management Corporation (BCI), one of Canada’s largest asset managers with a $171.3 bn portfolio.
