AXA acquires €1b European logistics portfolio from Gramercy

AXA Investment Managers - Real Assets has agreed to acquire a portfolio of 39 predominantly logistics assets spread across five European countries from Gramercy Property Europe for around €1bn.

The deal was made on behalf of a consortium of clients, including AXA Insurance Companies and AXA Core Europe, a pan-European open ended real estate fund.

The majority of the 1.2m sqm portfolio is located in Germany (45%), France and the Netherlands (45% combined), with an additional 10% in the UK and Poland. The assets are located in prime locations along major national and international transportation hubs or are in selected locations that are mission critical for their tenants. The portfolio is fully-let with typical average lease lengths in excess of eight years.

‘We really liked the Gramercy portfolio because it offered a great opportunity to buy pretty new assets with great tenants on long-leases in good locations,’ Laurent Jacquemin, head of European transactions at AXA IM - Real Assets, told REFIRE. ‘We could deploy between €1bn and €1.5bn over the next couple of years if we find more portfolios like Gramercy’s.’

The acquisition marks AXA IMRA’s re-entry into the logistics space, having not bought any logistics stock for around a year. ‘We’ve looked at several portfolios over the last 18 months but not all of the assets were good,’ Jacquemin said. ‘Some were value-add and vacant – we don’t want to reposition assets like that.’

Ideally, the group is targeting logistics portfolios of between €300m and €1bn, Jacquemin said.

Its newly acquired portfolio spans four asset classes, with logistics comprising 86.5% of the total, while the balance of the portfolio is spread across retail, car dealership and office assets. Almost half of the high-specification logistics properties are over 50,000 sqm in size and, largely occupied by a single tenant.

The deal reflects the increased interest on the part of international investors in Germany’s logistics sector, according to Nicole Kinne, a senior research consultant, Industrial & Logistics, at Colliers. ‘International investors now account for 38% of acquisitions in the sector, up from 21% a year ago,’ she said. ‘Demand for stock is very high due to strong growth in e-commerce in Germany, so we’re forecasting around €5bn in deals this year, up from €4.6bn last year,’ she added.

And there have been some mega deals to boost the market. In March, private equity behemoth Blackstone and pan-European multi-let real estate asset manager M7 Real Estate Ltd acquired a portfolio of light industrial assets in Germany and the Netherlands via their joint venture Onyx from UK-based Hansteen Holdings for €1.3bn. The purchase price is a premium of about 6% to the valuation at the end of 2016. The deal is expected to close before the end of June.

Economic activity rose somewhat unexpectedly to the highest level in almost six years in February, as the region’s recovery became more widespread. That, in turn, is fuelling demand for logistics from pension funds and other investors as e-commerce continues its upward trajectory.

In the first quarter, there were €1.9bn of logistics deals, double the volume of the first quarter of 2016 and accounting for 15% of all real estate transactions in Germany, according to Kinne. ‘The pressure to find assets is so high and investors are prepared to pay higher prices for logistics today, which means that prime yields could be compressed further from around 5.4% to sub-5% this year,’ she said.