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

Aguirre Newman: Logistics Inv’t Totalled €413M In H1

4 August 2016 – Mis Naves

Investment in the logistics sector amounted to €413 million during the first half of 2016, a similar figure to the one recorded during the same period last year, according to the conclusions of the Logistics Market Report for H1 2016, a study conducted by the real estate consultancy Aguirre Newman. The report explains that fewer operations have taken place during this time period, but those that have been completed have been larger (in value), including the portfolio sales undertaken by Gran Europa and Zaphir Logistics.

Almost all of the profitable investments have been made in the prime markets, Madrid and Barcelona, which together accounted for 80% of the total volume bought and sold. In addition, as a result of the product shortage, investor interest is starting to move to focus on secondary markets, such as Valencia, Zaragoza, Sevilla and Pamplona.

Demand for logistics space in Madrid during the second quarter of the year decreased by 76.3% with respect to the previous quarter (Q1 2016), with just 34,233 sqm of space leased. The most significant operations, of which there were seven in total, took place in Cabanillas del Campo and Coslada, which accounted for 45% of the total space leased.

The highest rental incomes recorded in Q2 amounted to €5/sqm/month and the rents in the prime areas remained stable at between €4.5/sqm/month and €5/sqm/month, as a result of the scarcity of operations completed.

According to the report, despite the low demand for logistics space, demand for industrial assets has been dynamic with 30 operations closed during the period, corresponding to 80,829 sqm of space, half in the rental segment. In terms of sales transactions, 63.6% related to spaces measuring less than 1,000 sqm. This data indicates an improvement in terms of demand in the industrial market, with a high number of low volume operations.

Just like in previous quarters, there was a high level of activity in the market for land dedicated to industrial/logistics use, a clear indicator of the return to property developer activity and the recovery of the sector. Six operations involving land were closed both for end clients and for development through new projects. They included the purchase of more than 160,000 sqm of land in Illescas (Toledo).

In Barcelona, during Q2 2016, demand for logistics space was very positive, reaching 160,469 sqm, a very similar figure to the one recorded during the same period in 2015 and almost 80% higher than during the first quarter of 2016.

During this period, 11 operations were closed, of which four involved spaces exceeding 10,000 sqm, accounting for more than 85% of the total space leased, which focused primarily on the regions of Baix Llobregat and Tarragonès.

In terms of the most significant operations by surface area leased in Q2 2016, Aguirre Newman’s report highlights the operation closed by Amazon in Prat de Llobregat covering 60,000 sqm on the ground floor. On the other hand, in the region of Tarragonès, an operation involving 42,250 sqm of land was closed to provide services to Amazon in the performance of its activity. These two operations accounted for 64% of the total space transacted. (…).

Original story: Mis Naves

Translation: Carmel Drake

Blackstone Owns c.5% Of Spain’s Logistics Assets

28 June 2016 – Expansión

Blackstone created Logicor in 2012 and since then, has grown the company by acquiring portfolios of logistics assets, to reach its current surface area coverage of 13 million sqm.

In Spain, Logicor has been purchasing assets for three years and now owns properties covering a total surface area of 1.1 million sqm, primarily in Madrid and Barcelona, making it the largest owner of logistics land in the country, with a market share of between 5% and 7%. It is followed in the ranking by Merlin Properties and Prologis, in an otherwise very fragmented sector.

Logicor’s Director General for Southern Europe, Manel Vericat, said that the company is still looking for logistics warehouses in Madrid and Barcelona, as well as in other cities, such as Valencia and Pamplona: “We are searching for products that have may potential thanks to the management of our team; and we are able to participate in operations that have higher risk because we have experience in this segment and are capable of managing these situations.

The Spanish subsidiary is led by Alejando Rumayor, who previously worked for Aguirre Newman, Iberdrola Inmobiliaria, ING Reim and CBRE, where he worked last before joining Logicor. The team in Barcelona is led by Xavier Novell, who joined the firm from Aguirre Newman, where he led the logistics and industrial department for the last decade.

In recent years, Logicor has made some major investments in Spain, such as the purchase of a portfolio of logistics assets from CBRE Global Investments, which covered a surface area of 78,000 sqm.

It also acquired a batch of logistics warehouses covering 106,000 sqm, from the French insurance company Axa.

Similarly, it purchased a batch of logistics assets from Gran Europa with a combined surface area of 319,000 sqm. And another one from SEP investments, measuring 138,000 sqm. Finally, one of its most important acquisitions at the global level involved a batch of warehouses from General Electric, of which around 348,000 sqm were located in Spain.

Rents

Vericat confirmed that, since last year, rents in the logistics sector have recovered in Barcelona. In Madrid, “we have not detected any increases yet, but certain rent incentives have disappeared, such as grace periods.

Original story: Expansión (by Marisa Anglés)

Translation: Carmel Drake