Tag: CIC

Logistics: Real Estate’s Ugly Duckling Sees its Investment Figures Soar

30 September 2018 – El Confidencial

It has always been the ugly duckling of the real estate sector. Nevertheless, the boom in e-commerce, the positive evolution of consumption and of the economy, in general, and real estate in particular, has triggered investment in these types of assets. For more than a year now, the sector has been starring in some of the most high-profile operations in the market, both at the corporate level, as well as in terms of the sale of portfolios and assets, attracting money from large international funds, as well as from domestic ones.

The data speaks for itself. Investment in logistics during the third quarter of 2018 – including plots of land – amounted to €450 million, equivalent to four times more than during the second quarter and 436% more than the figure registered during the same period a year earlier. That is according to data from the consultancy firm JLL, which shows that investment amounted to €872 million between January and September, 53% more the volume accumulated during the same period in 2017.

Moreover, the firm’s forecasts for the final stretch of the year for this sector are optimistic. “We expect the total volume to amount to €1.2 billion by the end of the year, 20% more than we expected last quarter, due to the good results and the fact that strong investor appetite is still alive”, said Borja Ortega, Director of Capital Markets at JLL.

“The logistics market is the absolute star of the real estate investment market in Spain. Investors see the potential associated with a market that has been growing for years”, says Ortega. Why? Its own fundamentals, the lack of product for investing in other segments such as offices and retail or the creation and consolidation of investors specialising in logistics”, he said.

In the last year and a half, the logistics sector has captured the media’s attention thanks to the completion of several very high profile operations. For example, on 25 September, Mango’s logistics platform in Barcelona was sold for €150 million. That asset, with a surface area of 181,000 m2 and owned by the Belgian investor group VG Partners since the end of 2016, was sold to the British Socimi Tritax Big Box.

It represented the largest investment in a single asset in the Spanish logistics market for the last four years since Logicor purchased some logistics facilities in Guadalajara spanning more than 320,000 m2 from Gran Europa for €133 million.

The operation also exceeded the €119 million that Blackstone paid in July to acquire the Socimi Lar’s logistics portfolio. In total, that deal involved 162,000 m2 of space spread over four logistics warehouses in Alovera (Guadalajara), one in the Juan Carlos I industrial estate of Almussafes (Valencia) and a plot for logistics development in Cheste (Valencia) spanning a further 182,000 m2.

Assets, portfolios, corporate operations

During the third quarter, there was a lot of movement in the sector such as the sale of two logistics portfolios – Hina Project with 6 warehouses and Gran Europa Portfolio with 3 warehouses – four purchases of logistics warehouses and a project comprising two plots in Cabanillas. Those transactions were accompanied by the purchase of two plots, one on the Centro —Ciudad del Transporte Industrial Estate in Guadalajara – and another in San Fernando de Henares. The latter was acquired by Merlin Properties for the construction of a logistics platform measuring 100,000 m2 (…).

All of these operations are happening in the midst of a genuine boom in e-commerce and online sales, a market in which the major online operators such as Amazon, Mercadona and Inditex have committed heavily. And for good reason, given that in 2017 alone, online sales moved more than €30 billion, according to data from the Spanish National Competition and Markets Commission (CNMC). And that figure is rising.

But the appetite of buyers is not only limited to the purchase of assets. At the corporate level, there have also been some significant transactions in recent months. A year ago, China Investment Corporation (CIC) completed the purchase of Logicor for €12.25 billion, one of the largest logistics companies in Europe and the largest owner of logistics assets in the Spanish market with a portfolio spanning more than 1 million m2 located primarily in Madrid and Barcelona. That operation became the second largest real estate purchase in history and the fourth largest by a Chinese company in Europe.

Meanwhile, P3 Spain Logistic Park, the logistics centre Socimi that the sovereign fund Singapore GIC owns in Spain, made its debut on the Alternative Investment Market (MAB) last year with eleven logistics centres that span a total surface area of 321,392 m2 and which are spread across five autonomous communities, although most are in Madrid and Castilla-La Mancha.

Even the Murcian businessman, Trinitario Casanova, through Grupo Baraka has backed the logistics sector. In February this year, he purchased a logistics-industrial use plot located in the municipality of Sant Esteve Sesrovires, in Barcelona.

A sector traditionally forgotten

“For years, the logistics sector has been one of the ‘great forgottens’ of the real estate sector. Nevertheless, today it is clearly a segment to which investors pay a lot of attention. (…). In fact, given the competitive pressure, it is the only sector where returns are continuing to fall. Prime returns at the end of the third quarter of 2018 amounted to 5.25%, making them lower than during the last upward cycle in 2006, when they amounted to 5.75%”, said Ortega.

On the other hand, unlike what has happened in other real estate sectors such as residential or offices, whose activity is concentrated in the major cities such as Madrid and Barcelona, 34% of logistics investment in the third quarter has been in Cataluña and 32% in Madrid. The rest has been concentrated in other regions such as Valencia (…).

Original story: El Confidencial (by E. Sanz)

Translation: Carmel Drake

Deloitte: Spain’s Logistics Sector is Hot Property Thanks to the ‘Amazon Effect’

18 May 2018 – Expansión

Investment funds want to take advantage of the collateral effects that the boom in e-commerce is going to have in the real estate market by taking positions in a segment with great potential, namely: the storage of goods and products. The logistics segment has become the “golden girl” of the real estate sector and one of the favourites of investors boosted by strong yields and the expectations of business growth. In this context, Asian investors have placed their focus on the European logistics market.

According to the Logistics Property Handbook compiled by Deloitte, last year, investment in logistics assets in Europe recorded a milestone with €42.5 billion of assets transacted, thanks to mega-operations such as the purchase by China Investment Corporation (CIC) from Blackstone of the Pan-European platform Logicor for €12.2 billion, and the acquisition of the European platform Gazeley by Global Logistic Properties (GLP), headquartered in Singapore, for €2.4 billion.

Mega-operations

In Spain alone, investment in logistics assets amounted to €1.63 billion, which represented a 75% increase compared to the previous year, and a historical record, due to significant transactions involving logistics portfolios. CIC’s purchase of Logicor implied a transaction volume of €652 million in Spain. Meanwhile, P3 Logistic Park – owned by the Singapore sovereign fund, GIC – purchased 11 assets from Green Oak in Spain for €243 million. Those operations boosted investment to historic levels.

Moreover, last year, Mango sold its logistics centre in Palau-Solità I Plegamans (Barcelona) to the fund manager Invesco for €100 million. That transaction was the largest involving a single asset in Spain and the fourth-largest in Europe.

According to the forecasts in the report, operations in the pipeline, which may be closed this year, already amount to €980 million.

“The large institutional funds that aspire to lead the logistics sector in Europe and around the world are bidding hard to accumulate the largest logistics surface area possible during this economic cycle. The location and size of their international logistics platforms are the two key variables for exercising greater negotiation power and whereby obtain the highest rents from operators”, explains Javier García-Matro, Partner in Financial Advisory at Deloitte.

Despite the record investment figure recorded last year, the volume of assets transacted in Spain represents just 4% of the total European market. “This fact is proof of the growth potential of these types of assets in our country. In 2017 alone, 865,000 m2 of logistics space was handed over in Madrid, Cataluña and Valencia. The strong demand of the current cycle is causing logistics promoters to develop more than 2 million m2 of land in these markets, in both turnkey and speculative projects”, says García-Mateo.

One of the major players in the sector is the Socimi Merlin, which has placed logistics asset at the centre of its growth strategy. Merlin’s expansion plan involves the development of land and turnkey construction, a roadmap that has allowed it to become one of the leaders in the sector in just four years.

The main players

Merlin has 2 million m2 of logistics land, both in portfolio and under management, and its plans involve increasing that volume to 3 million m2 before the end of the economic cycle. Specifically, it plans to spend around €250 million on logistics development over the next four years.

Another important player is Logicor, the Pan-European platform, which has been controlled by the Chinese group GIC since last year and which owns 1.2 million m2. Meanwhile, the alliance formed by the real estate manager CBRE GI and its local partner Montepino is going to develop a portfolio of prime assets in the main geographic areas of Spain with a planned investment of around €300 million.

They are joined by the European giants Prologic and the platform P3 Logistic Parks, which own 900,000 m2 and 400,000 m2, respectively, as well as the European investment group VGP, which owns almost 400,000 m2 of logistics space in Spain.

In terms of the types of assets, the Amazon effect has revolutionised the industrial sector and forced logistics operators to reinvent themselves to adapt to the new needs of clients (…).

Original story: Expansión (by Rebeca Arroyo)

Translation: Carmel Drake

CBRE: Logistics Inv’t Rose By 29% To €664M In H1 2017

20 July 2017 – Eje Prime

Investment in the Spanish logistics market soared once more during the first half of the year. Transactions involving logistics assets amounted to €664 million during the first six months of 2017, representing an increase of 29% with respect to the same period last year, when investment stood at €514 million, according to a study prepared by the real estate consultancy firm CBRE.

In the second quarter alone, industrial and logistics investment reached €364 million, a figure that far surpassed the amount recorded in the second quarter of 2016 (€300 million).

According to the consultancy firm, the difference compared to previous years is that the “appeal” of this sector is not concentrated only in Madrid and Barcelona, but rather it extends to other cities, such as Zaragoza, Valencia, Bilbao, Málaga and Sevilla.

Similarly, interest in investment in high-risk projects has been consolidated, due to the growth in the volume of logistics space leased in every city caused by e-commerce. In fact, investors who have never shown any interest in logistics have started to consider the sector as a necessary component of their portfolios, according to CBRE.

Some of the main logistics transactions closed so far this year include GIC’s acquisition of the Acero portfolio, worth €243 million; CIC’s purchase of Logicor’s assets; and Axiare’s acquisition of the second phase of a project located in San Fernando de Henares (Madrid), worth €38 million.

Original story: Eje Prime

Translation: Carmel Drake

Blackstone Sells Logicor To Chinese Sovereign Fund For €12.5Bn

5 June 2017 – Real Estate Press

Logicor’s Spanish logistics portfolio, which covers more than 1 million m2, has been included in the second largest real estate operation ever to be closed in Europe. The deal has involved the sale of Logicor by Blackstone to the sovereign fund China Investment Corporation CIC, for €12,500 million, according to a statement issued by the US group on Friday.

Logicor, a company created by Blackstone in 2012, owns a portfolio comprising more than 600 high-quality European logistics assets, which have a combined surface area of 13 million m2, located in 17 countries, although more than 70% of the properties are concentrated in the United Kingdom, Germany, France and Southern Europe. All of the assets are located in major European economies, along the main transport corridors and very close to major population centres. The portfolio is in an ideal position to benefit from the structural changes in demand that is currently being driven by the rapid growth in on-line trade.

In Spain, the company owns a portfolio covering more than 1.2 million m2, located primarily in Madrid and Barcelona, after having acquired assets from Axa, CBRE GI, SEP Investment, Gran Europa and General Electric, amongst others. Half of the Spanish portfolio is located in the Corredor de Henares. Logicor’s most recent acquisitions in Spain have included two warehouses spanning 70,000 m2 in Torrejón de Ardoz from IDI Gazeley, a purchase that formed part of a larger European operation covering 200,000 m2; and a 82,000 m2 space, which itacquired from Godman, also as part of a larger European operation.

With the sale of Logicor, Blackstone has repeated the move it made with IndCor in the United States in December 2014. On that occasion, the buyer was the Singapore sovereign fund, GIC, which paid $8,500 million for IndCor’s logistics assets, which covered a total logistics surface area of 12 million m2. And it was Blackstone that was the first to predict the effect that logistics spaces would have with the arrival of e-commerce, in addition to its great capacity to raise capital.

Antony Meyers, Director of Real Estate at Blackstone in Europe said: “We have constructed Logicor, through more than 50 acquisitions, to be a leading pan-European logistics company”. “Now, it will have an excellent new owner, with a long-term vision and we have no doubt that it will maintain its strength in a sector that has a very positive outlook”.

CIC fought off competition in the bid for Logicor from Mapletree Investment and Temasek, a joint venture formed by two Singapore state funds, according to a person familiar with the bid process, as well as Global Logistics Properties, a company controlled by the Singapore sovereign fund, GIC.

Logistics spaces are going to have enormous value for e-commerce companies, such as Amazon. Logicor has focused on the growth of its business in Western Europe, where on-line shopping is less developed than in the United Kingdom. The agreement is expected to be closed before the end of the year.

Original story: Real Estate Press

Translation: Carmel Drake