Transactions - MAY 2, 2017

AXA acquires €1b of European logistics assets from Gramercy

by Andrea Waitrovich

Gramercy Property Europe, a Europe-focused real estate investment fund sponsored and managed by Gramercy Property Trust, has sold 100 percent of its assets to a consortium of clients managed by AXA Investment Managers – Real Assets. The total gross valuation is approximately €1.0 billion ($1.1 billion).

The transaction has been made on behalf of a consortium of clients, namely AXA Insurance Companies and AXA CoRE Europe, a pan-European open-ended real estate fund.
The 39-asset portfolio totals more than 12.9 million square feet, predominantly concentrated in Germany, the Netherlands and France, with a circa 10 percent holding in the United Kingdom and Poland. The portfolio spans four asset classes.

Almost half of the high-specification logistics properties are approximately 540,000 square feet in size and, although they are almost entirely occupied by a high-quality sole tenant, offer the flexibility to subdivide, if required.

The transaction is expected to close in the third quarter of 2017.

This transaction is in line with AXA IM - Real Assets’ investment strategy, which logistics remains an important pillar in response to a growing demand from institutional investors seeking access to medium risk and assets aiming to produce regular income.

The logistics sector in Europe has been experiencing a record level of investment activity. Real Capital Analytics data shows European logistics investment volume increased to a record €12.9 billion ($13.6 billion) in 2016 from €12.0 billion ($12.6 billion) in 2015.

Recently, NREP, a Pan-Nordic real estate fund manager, created a €1.1 billion ($1.2 billion) Nordic logistics platform. Also, The Blackstone Group partnered with Delin Capital Asset Management to acquire logistics assets in the United Kingdom and Western Europe. And The Blackstone Group with its partner M7 Real Estate purchased Hansteen Holdings Plc’s continental European properties. Another recent joint venture was between pan-European logistics real estate specialist Logistics Capital Partners and Eurofund Capital Partners, a Spain- and Portugal-focused retail developer, which launched a new joint venture, Eurofund LCP.

In addition, U.S. pension fund the $188.6 billion California State Teachers Retirement System is investing €400 million ($424.7 million) in CP Logistics Europe SARL, a joint venture with Principal Real Estate Investors.

The online share of the E.U. retail market has risen from 7 percent to 9 percent over the past two years, an increase that will provide further support to the urban logistics sector, according to Savills Investment Management. In its European Outlook report, Savills IM highlights urban logistics as one of its preferred European investment sectors, especially in markets where Internet sales as a proportion of total retail sales are at, or about to exceed, the 5 percent threshold.

In addition, Savills concluded in its Megatrends Logistics report that European consumers are becoming accustomed to one-day delivery. The impact of technology combined with changing consumer habits means that increasing amounts of warehouse space is required across Europe.

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