The world’s largest institutional investors are converging on Europe’s logistics market as private equity firms begin to exit.
Singaporean sovereign wealth fund GIC is in pole position to buy TPG and Ivanhoe Cambridge’s Point Park Properties, which owns a €2.5bn (£2.1bn) 35.5m sq ft portfolio with a 15m sq ft development pipeline. The company, being sold through Eastdil Secured, has assets in Bulgaria, the Czech Republic, France, Germany, Italy, the Netherlands, Poland, Romania, Serbia, Slovakia and Spain.
The deal is the first in the sector this cycle, with major private equity firms selling to longer-term investors.
Illustrating the appetite from investors historically underweight in the sector, Canadian Pension Plan Investment Board and Macquarie Capital are also competing to buy P3. Sovereign wealth funds are understood to be eager to buy any stakes GIC may be willing to syndicate.
The P3 buy starts to fill a hole in GIC’s portfolio. It has a substantial exposure to logistics through Singapore-listed Global Logistic Properties, of which it is the majority owner, in Asia and the US, but had only made tentative steps in Europe, having formed a €300m joint venture with Exeter Property Group last year.
The deal brings into focus two other private equity firms’ investments in European logistics over the past four years.
Blackstone established Logicor in 2012, has built an €11bn portfolio totalling 140m sq ft and is the second largest owner of logistics in Europe. The private equity firm began exploring a sale of Logicor in May but this has now been delayed until next year.
Logicor would have a market capitalisation of €6bn if listed, but an exit for Blackstone is not straightforward. IPO markets have been volatile and listings of such size are rare.
A trade sale would require an equity cheque of at least €3.5bn, precluding many investors, and may require some teaming up.
GIC or Global Logistics Properties have long been mooted as likely end buyers of Logicor, a theory fueled in part by GLP’s $8.1bn purchase of IndCor, Blackstone’s US logistics platform, in 2014. As well as GIC, GLP counts CPPIB and major Blackstone investor China Investment Corporation as investors on its share roster.
Brookfield bought Gazeley in 2013 for around £370m from EZW and has since almost tripled the size of its European portfolio to 16m sq ft across 74 buildings. It also merged the company with its Industrial Developments International business in 2014 to form a global firm – IDI Gazeley – also active in North America and Asia.
While Brookfield is not expected to exit imminently, Gazeley’s mainly western European portfolio is seen as a good fit with P3’s eastern European portfolio and could be an eventual play for its new owner. Brookfield typically holds investments for around five years.
Sovereign wealth and Canadian pension funds hungry for European logistics
PSP
Established €1bn SELP jv with SEGRO in 2013. Portfolio now over €2bn
CPPIB
Alongside Goodman and Dutch pension fund APG formed a £1bn UK logistics jv last year
GIC
Frontrunner to buy P3 and formed €300m jv with Exter Properties Group last year
HOOPP
Canadian pension fund agreed deal in 2013 to back developer and investor Verdion
NORGES
Formed Prologis European Logistics Partners with Prologis in 2013 with €2.4bn of assets
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