Europa Capital sets up €150m German logistics JV with Cromwell
Pan-European real estate investment manager Europa Capital has teamed up in a new joint venture with Australian logistics group Cromwell Property Group to launch a German logistics operation, targeting a gross asset value of €150m.
The JV will target logistics assets and portfolios across Germany with individual lot sizes starting from €8 million, where Europa Capital says it and Cromwell can leverage their combined active asset management expertise to create value.
The new entity has already made its first investment, buying a 12,000 sq m warehouse property near Cologne and is currently undertaking due diligence on other assets as it continues to build a strong pipeline of future investments.
Europa Capital has form in setting up similar platforms across Europe, including in the UK, the Netherlands and Germany.
According to Jason Oram, partner and fund manager at Europa Capital, “We have seen a significant increase in the demand for light industrial and last mile logistics assets from institutional investors. Real estate allocations have started to shift away from sectors, which have been adversely affected by ongoing structural changes in the industry and the Covid-19 pandemic, towards the logistics space, where we are able to leverage our track record.
"The sector has proven its resilience during the pandemic, evidenced by the high levels of rent collection we have recorded across our wider portfolio and we firmly believe that rents will grow for well located assets within this sector over the course of our hold period in this venture.”
His colleague James Farmer, responsible for origination and acquisitions at Europa Capital, added: “Strong occupational demand is being driven by a growing need for distribution space, which is putting upward pressure on rents and creating favourable conditions for us to reduce existing vacancies and improve valuations over the anticipated holding period of this platform.
"Continental Europe lags the US & UK in terms of e-commerce penetration and we believe that this will be a substantial driver of performance in the logistics sector in countries such as Germany over the next five years and beyond."
The move marks an increased weighting by Europa Capital since the beginning of the pandemic towards the logistics and residential sectors. In Berlin, it has partnered up with the Skjerven Group to invest an initial €150m in a value-add residential fund, and recently bought the first two assets for about €20m.
Two months ago, Europa Capital divested a 38-asset portfolio of its Dutch and German urban logistics and warehouse assets to Strategic Industrial Real Estate (SIRE), Arrow Capital Partners’ platform backed by Cerberus, for a price of €270m. The assets had been originally acquired by Europa Capital on a piece by piece basis on behalf of three different value add investment strategies (First Business Parks, Dutch Urban Light Industrial Platform and German Logistics Partnership) covering urban logistics in Germany, urban logistics in The Netherlands and warehousing in Germany.