Gramercy targeting €800m in Europe, swallows Goodman portfolio

Gramercy Europe, a wholly-owned subsidiary of the US REIT Gramercy Property Trust, is taking full control of a real estate portfolio it held in a joint venture with Goodman. The deal is part of Gramercy's programme to invest up to €800m in Europe this year.

The investment manager, an investment fund that targets single tenant net leased assets and sale-leaseback transactions across Europe, said its Gramercy Property Europe fund was taking the 20% stake it did not already hold in the nine-asset portfolio. The remaining 80% of the portfolio is currently owned by parent Gramercy Property Trust in New York.

Goodman, which held the stake in its Goodman Europe Development Trust, will continue to manage the portfolio for Gramercy, with completion of the deal expected later this month. The 499,000sqm portfolio includes eight warehouses in Germany and one warehouse in France.

Gramercy said all buildings were developed within the last eight years and were fully let to strong single-tenant occupiers. The portfolio, which has an average lease term of six years, is occupied by tenants including Amazon, Lear Corporation, Geodis Logistics and Deutsche Post.

Gramercy Europe has also just acquired a 280,000 sqm mixed commercial portfolio in the Netherlands, Germany and Poland, consisting of 12 single-tenant buildings, of which six are in the Netherland, four in Germany and two in Poland. Berlin Hyp is providing financing of €125m for the portfolio, which is leased long-term to tenants including Hornbach and Cofely.

Last year the company bought three logistics assets in Poland and the Netherlands for around €60m. The company bought 99,364sqm of logistics centres in Strykow and Piaseczno in Poland and the 26,379sqm Van den Heuvel Logistiek centre in Uden in the Netherlands, as part of nearly €220m of acquisitions in the second half of the year.

REFIRE met with Alistair Calvert recently, managing director and head of investment at Gramercy Europe, who said the deals were part of the company’s plan to build a pan-European portfolio of industrial, office, retail and special-purpose assets with medium or long-term leases to “highly durable or investment-grade tenants”.

Calvert previously worked for ThreadGreen Europe, and subsequently sale-and-leaseback specialist WP Carey when it bought out ThreadGreen, is spearheading Gramercy's European drive which has initial private equity commitments of €350m from groups such as the New York-based Fir Tree, Senator Investment Group and Washington-based EJF Capital, as well as its own parent company.

Calvert said the company's German pipeline was filling up rapidly with deals, mostly sized between €10m and €30m. All are single-asset sales and are mostly logistics properties. Two deals are under exclusivity in eastern Germany and other smaller deals will soon be closed in cities such as Hannover.

Gramercy Property Europe's fund, set up a year ago, has since built up a portfolio of more than €300m, with logistics making up 63.5%, retail 24%, special purpose assets (i.e. premises including offices and production facilities) at 8% and offices at 4.4%. The fund is targeting cash-on-cash yields of more than 10%, Calvert told REFIRE.

Germany will remain the key market at about 50% investment weighting, with 30% targeted at the Netherlands, and 20% on a discriminatory basis between markets such as France and Poland. Gramercy's close relationship with its tenants means it would, if necessary, follow them into other markets such as Spain or the Czech Republic if that made sense, said Calvert. Falling yields in the logistics sector in Germany (by up to 75 bps last year, to an average of 5.27%) means that Gramercy's geographical strategy would remain flexible, depending on opportunities, said Calvert.