Delin Capital Asset Management is preparing to launch a €400m (£332m) logistics fund as interest in big-box UK industrial continues to boom.
The two-year-old Jersey-based firm’s second fund will target single-let grade-A assets similar to the properties bought by its existing Capital Preservation Portfolio 1.
The follow-on fund is to be leveraged at a 50-60% loan-to- value, with a lifespan of seven to 10 years. It will be closed-ended, and target a total return of 10-12%.
A fundraising strategy is currently being decided, but Delin is expected to be sourcing funds from its current backers, comprising Russian high-net-worth individuals. However, it may also draw funds from new investors or segregated account mandates.
Delin chief executive Christian Jamison said: “I have been taken aback by some of the appetite from banks, debt funds and insurance companies. There is a lot of demand for logistics space and you have had an absolute freeze on new developments – we have seen a 100-basis-point drop in yields over the past 12 months for established logistics sites.”
Prime logistics yields now stand at an average of 5.75%, down from 6.5% over the course of 2013, according to CBRE.
CPP1 has so far invested £219m across 13 assets in the North and West Midlands, ?and in the Netherlands.
Delin plans to invest a further £110m from CPP1 on up to five transactions by the end of the year before lining up investors for its second fund.
The fund manager is seeking terms from a number of parties to recycle capital from unleveraged UK assets in its first portfolio to finance the additional purchases.
CPP1 is also mandated to target assets in Belgium, but has not yet made any purchases in the country.
Delin made its debut bids in December 2012, and in January this year confirmed the purchase of the Wave portfolio from Infrared Capital Partners for £66m – a net initial yield of 7.2%.
chris.berkin@estatesgazette.com
