Garbe readies €600m flotation of industrial REIT Logistrial

German family-owned logistics property group Garbe Industrial Real Estate is planning to float its Logistrial property unit on the Frankfurt stock exchange as an industrial REIT, hoping to benefit from a boom in Germany's real estate market.

In what has been a difficult year for equity raising in Germany, the Hamburg-based Garbe, which develops logistics facilities, warehouses and business parks in Germany, France and the Netherlands, is offering new shares worth €550m to €605m in Logistrial. 

The IPO could value Logistrial at up to €887m, including its up to €250m of debt, it said. After the IPO, 95% of Logistrial’s shares would be in free float.

Logistrial is targeting a dividend yield of 5% and a medium-term gross asset value of more than €2 billion. 

"The company intends to become a leading consolidator in the European logistics real estate market," Logistrial said, adding it hopes to benefit from the continued growth of online retailers.

Logistrial said it will use the proceeds of the deal to buy properties with a gross asset value of €768 million euros, seeded mostly from Garbe itself, which included eight new developments, mainly pre-let. The REIT, which is expected to be launched in Frankfurt by 2020, will be asset-managed by Garbe’s logistics division, Garbe Industrial Real Estate.

Logistrial itself already has 20 secured assets covering 620,000 sqm of logistics space, almost completely let to 52 different tenants, and generating about €39m in annual rental income.

The market for logistics properties continues to be buoyant, with logistics rents rising across Europe by 2.3% in 2018, according to Cushman & Wakefield. Broker Savills said in a recent note that the share of logistics in European investment activity has risen to 14% of the total and is expected to grow even further this year.

Deutsche Bank and JP Morgan are bookrunning the deal, together with Kempen.

REFIRE reported in May this year that Garbe was preparing for this stock market flotation, so things have firmed up since then. Separately, two other residential property firms, Isaria Wohnbau and Domicil Real Estate, are also preparing stock market flotations.