Palmira Capital beefs up management for further logistics expansion
Leading logistics asset manager Palmira Capital Partners has been busy buying several new assets and beefing up its management team by adding new hires over the past couple of months
The company bought its first property for its UIC 2 fund several months ago in Radebeul near Dresden, in a sale-and leaseback deal. The 10,400 sqm industrial property is fully let on a 15-year lease. It also bought a fully-let commercial park at Oberhauptstrasse in Hamburg for the same fund from Nilsson + Nilsson GbR, with a lettable area of about 4,000 sqm, of which about three quarters is office space.
The UIC 2 fund, Palmira's third corporate real estate fund, is aimed at institutional investors, with a target equity capital volume of €250m, leveraging up to €450m. It focuses on commercial parks, small-scale office parks and industrial/production facilities in Germany. The target distribution yield is 6.25%.
Another of its funds, the European Core Logistics Fund (ECLF), bought an 'as-new' cross-dock parcel distribution centre in Norderstedt, north of Hamburg, from BEOS. On a 72,600 sqm site, the building, which is 97.5% let, has a lettable area of 20,000 sqm, including 15,600 sqm of warehouse/logistics space and 4,400 sqm of office and staff accomodation.
The €650m (with leverage) open-ended ECLF is more focused on future-oriented logistics properties at key strategic locations, as well as properties for urban last-mile deliveries around big European cities. Its planned distribution yield is 5.0%. Last month Palmira bought a further asset for the fund, a state-of-the-art last-mile logistics property in Lodz, Poland. The 12,300 sqm property is fully let to two tenants, a leading last-mile logistics service provider and an online retailer.
Further acquisitions include a 17,900 sqm modernised commercial park from Aurelis Real Estate in Wiesbaden for a separate account, done in an off-market transaction. The property is 75% let.
To boost its fund capacities, Palmira recently hired experienced fund specialist Silvio Müller from DWS alternatives, where he managed more than €20bn of German and Luxembourg funds. He will work alongside Rui Mercadal Vieira in handling the sourcing, acquisition and fund management of Palmira's diverse logistics funds, reporting to Palmira managing partners Mathias Leidgeb and Alexander Hoff.
Given the complexity of ESG issues in the funds' existing and future make-up, the company has also bundled its ESG competencies into a new division under Christean Schmidt, who arrives from Gogas Goch, where he had responsibility for heating and climate technology matters, such as lowering CO2 emissions.
Palmira manages more than €1.5bn of real estate assets with 42 staff operating from eight European locations, making it the largest German captive asset manager in the logistics sector.
Logistics rents rising steadily
Separately, several new index readings and market reports underline how logistics property rent levels have continued to perform strongly throughout the pandemic, as the asset class remains among investors' favourites.
The Iwip Industrial Property Index from IndustrialPort shows that rents for handling and distribution centres have continued to rise steadily through the first half of 2021. However, the same is not true for warehouses and production halls, the latter which has seen falls of up to 13%, while warehouses have seen falls of 3.9%. Pure logistics properties have seen rents rise by 5.4%.
Catella Research attributes the rise in pure logistics to the high demand for city logistics and last-mile facilities closest to the conurbations, while price falls can be observed in locations further out. CBRE say the biggest demand for logistics space is coming from the retail sector, up about 37% in the first half versus last year, and now making up about half of all demand.
According to the CBRE researchers, the median rent for logistics properties in Germany rose to an average of €5.10/sqm in the second quarter of 2021. Four specific logistics locations are already seeing top rents above the €6/sqm mark: namely Munich (€7.35/sqm ), Stuttgart (€6.55/sqm), Frankfurt (€6.30/sqm ) and Hamburg (€6.30/sqm ). Broker Colliers has even identifed a top rent of €7.50/sqm.
According to CBRE, the industrial and logistics property market had the "most active first half-year in its history" in terms of take-up, with 3.5 million sqm (+ 9.1%). Colliers defines the logistics segment somewhat more narrowly and only assumes a take-up of 1.7 million sqm, but even it arrives at an increase of 40% compared on the previous year by its own definition.
The transaction market has been very granular. While CBRE did not record a single deal above the 100,000 sqm mark in the first half of 2021, take-up in the segment below 10,000 sqm rose by 52.7% to 1.126 million sqm - corresponding to almost a third of the total market activity.