Brookfield has appointed CBRE alongside Morgan Stanley to advise on the sale of the €2bn (£1.8bn) European arm of IDI Gazeley, its logistics business.
Morgan Stanley is already helping to refinance the business and reduce its cost of debt ahead of a sale.
The business is held in Brookfield’s $4.4bn (£3.5bn) Strategic Real Estate Partners fund, which closed in 2012 and has a 10-year life.
In April Brookfield Property Group chairman Ric Clark told EG: “There’s a rapid change in distribution channels going on and we think there’s lots more upside in that business. Gazeley’s in a great position to capitalise on that change as it’s a development-focused business and a lot of businesses don’t have those development capabilities.”
The fund manager bought the business from EZW in 2013 for $370m and has since fueled its expansion through development under the leadership of Pat McGillycuddy, chief executive of Europe.
The sale comes amid high demand for logistics assets as major sovereign wealth and pension funds look to take advantage of the relatively high returns the sector provides compared with other asset classes.
This demand has been most strongly illustrated by China Investment Corporation’s €12.25bn purchase earlier this month of Logicor from Blackstone agreed earlier this month. This followed GIC’s acquisition last year of Ivanhoe Cambridge and TPG’s P3 for €2.4bn.
Because the size of the Gazeley opportunity is more manageable than Logicor, it is possible that competition will be even greater. The underbidders for Logicor, which have now shown clear interest in entering the European logistics market, were Mapletree Investments with Tamesek Holdings. Global Logistic Properties could also be a potential purchaser.
P3, which has an eastern Europe-based portfolio, has also long been seen by experts as a natural fit with Gazeley, which has a portfolio of assets in western Europe. However, P3 backer GIC dropped out of the running for Logicor at an early stage as the pricing of the deal rose to beyond that which would match its return requirements.
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