UK - UK pension funds see continued traction in Central and Eastern European (CEE) logistics despite concerns over pricing in other segments of those markets.
In an interview with IPE Real Estate, as it announced the launch of LogAxes - a logistics and industrial assets fund - Morley fund manager Andrew Hook said UK and some continental European schemes had already shown significant interest in the fund.
"We're pitching it to pension funds, life funds, insurers, from a broad range of nationalities," he said, and, to date, interest has come from pension funds in the UK and some mature European markets.
The 10-year fund - a joint venture between Morley and Munich-based fund manager Sachsenfonds, with a target size of €157.5 m - will capitalise on the "active and growing logistics market" in emerging Europe. It currently has commitments worth €42m and a forecast 9—10% internal rate of return.
Hook said pension funds were keen to exploit a relatively underdeveloped CEE sector compared with the UK and US. He added, other than volume, there was little to distinguish quality logistics assets in mature and emerging European markets.
"There are quality occupiers and developers in CEE economies," said Hook. "In any case, the fund is looking for quality core products.
"If you look at the weight of Germany and Western European economies, there's more logistics provision, but CEE is growing."
That said, the fund is notably weighted towards mature markets: Germany and Austria will account for 60%. The remaining 40% will comprise assets in Poland, Hungary, Slovakia and the Czech Republic. To date, LogAxes has acquired four assets in Slovakia and Austria for a total €63m.
Asked about the timing of the fund launch, given recent pressure on debt markets, Hook was unfazed.
"We've maintained deal discipline. We've been buying throughout 2007, and we've been better able than the market to pick up assets. It helps that we have a local partner," said Hook.
Morley previously launched two funds with Sachsenfonds but this latest fund would look for a second closing at the end of Q1, Hook said.