Rasmala to grow German portfolio by $750m over next 24 months

London-based investment management firm Rasmala plc is on a drive to channel around $750m (€608m) into German offices and logistics over the next 24 months, its head of real estate, Naseer Aka, told REFIRE this month.

‘We’re looking to take our German book to around $500m in logistics as well as another $250m in offices within the next 24 months,’ Aka said.

Rasmala entered the German logistivs space this month, acquiring three logistics facilities for €154m. The deal was completed through Rasmala’s Dubai-based asset management subsidiary, Rasmala Investment Bank Limited.

The first facility comprises a major new Amazon logistics centre across two properties totalling 88,000 sqm and was acquired for €121m. The group has also acquired a second facility, a €33m logistics centre let to a subsidiary of Decathlon, the sports goods retailer. Both facilities are located in the new Westfalenhütte logistics park, north-east of Dortmund, Germany, which offers easy access to both eastern and western Germany.

‘Germany is at the forefront of early adoption of the younger generation shopping online,’ Aka said. ‘Financing rates in Germany are also quite compelling.’

More Middle Eastern and Asian investors are likely to enter Germany’s logistics space this year, Willi Weis, head of industrial investment at JLL Germany, told REFIRE. ‘There is a huge demand for strategically-driven logistics,’ he said. ‘Asian investors, in most cases, will prefer to partner established players here, whereas Middle Eastern investors are more likely to use a property management platform.’

Rasmala has been on a massive investment drive since it entered the real estate investment management space in 2015, amassing a $500m portfolio. That figure is about to skyrocket. Rasmala Group’s CEO, Zak Hydari, has said he would like to deploy $1b into logistics globally within the next two years. So far, the group has invested in Germany, the UK and Dubai. In March last year, it acquired Amazon’s biggest UK fulfilment and distribution centre – at 93,000 sqm – in Dunfermline, Scotland, for £61m, which is believed to be the biggest single asset logistics deal in Scotland to date. The group would like to grow its exposure to the UK to $500m within the next two years, Aka said. It also acquired a fully-let portfolio of 120 warehouses in Dubai Investments Park, close to the Jebel Ali Free Zone in Dubai, for $140m.

‘Rasmala’s acquisition of over $400m of logistics assets demonstrates our appetite for stable income-yielding assets,’ said Hydari. ‘Well-situated logistics centres let to the right tenants have become a critically important part of any large real estate portfolio. Real estate is going to remain a key strategic pillar of our 2018 plans leveraging our expertise in acquiring attractive assets in the most in-demand asset categories, let to blue-chip tenants,’ he added.

Like many other investors, Rasmala is keen to tap into the ever-growing online market: ‘E-commerce continues to grow its market share,’ said Aka. ‘As a result, distribution centres have taken over from traditional retail space as drivers of rental growth. As the leading e-retailer in the United States and the world’s biggest retailer by market value, Amazon is the kind of blue chip tenant we want.’

Subsequently, his firm is eyeing new pastures: ‘We’d like to invest in offices and logistics in the Netherlands, France and Ireland,’ Aka said. ‘We want to identify logistics opportunities where the quality of the assets supports the technology going into these facilities. We won’t develop them but we will partner up with developers who can be on the ground to manage them.’

Rasmala arranged funding of the purchase through DekaBank and were advised on the transaction by Addleshaw Goddard LLP and GSK Stockmann as legal advisers, E&Y as financial advisers and CBRE as buy-side advisers. Gulf Islamic Investments were co-investment advisers on the Amazon transaction.

DekaBank arranged and fully underwrote the senior debt facility on Rasmala’s three logistics assets in Westfalenhütte in Dortmund. ‘This transaction reflects the type of lending that DekaBank wishes to mainly focus on in Germany, that being to primarily let core assets to experienced sponsors,’ said Amar Latif, head of origination for DekaBank’s German platform. ‘We are very much focused on growing our loan book with similar financings in 2018.’

Other investors are also on a mission to beef up their exposure to European logistics this year. AXA Investment Managers - Real Assets would like to do more than €1b of logistics deals in Europe this year, in line with last year. Laurent Jacquemin, head of European transactions at the group told REFIRE that AXA IM Real Assts ‘wants to grow its logistics portfolio, notably in Germany’.

The group announced in October that it had raised more than €1b for its CoRE Europe Fund since the fund was launched with €500m of commitments in March 2016. The pan-European open-ended real estate fund seeks to provide institutional investors with long-term stable income through the acquisition of core European real estate assets by capitalising on individual market dynamics and timing. In the long term, AXA IM - Real Assets aims to grow the fund into a flagship European open-ended fund.

Last year marked record year for German logistics

Last year marked a record year for German logistics, according to Colliers International, with €8.7b of light industrial and logistics deals. This was almost double the €4.6b recorded in 2016.

‘2017 was the year of high-volume portfolio deals and company takeovers, which contributed the lion’s share to an exceptional annual result,’ said Peter Kunz, head of industrial & logistics at Colliers International. ‘We are seeing strong growth in the sector and many investors are choosing to go with logistics investments over other asset classes due to higher yields.’

High demand for logistics properties is largely attributable to the e-commerce boom, which is driving demand for new and modern logistics space in Germany and pushing rents up in the logistics regions. Prime core assets, such as new builds with a strong-covenant tenant under long-term lease, are often being snapped up before construction has even begun.

Several multi-billion portfolio deals were transacted in the European logistics space over the past year, including Blackstone’s sale of Logicor, its European logistics platform, to China Investment Corporation. The German share of the portfolio alone accounted for €2b (total volume: €12.2b), almost a quarter of 2017’s total transaction volume, according to Colliers. Also, in October last year, GLP, the world’s largest supplier of logistics space in Singapore, made its first foray into Europe with its acquisition of UK property developer and investment company Gazeley for €2.4b, including €815m of assets in Germany. Portfolio deals accounted for €6.1b of deals last year, or around 71% of the total transaction volume. Foreign investors acquired 80% of these portfolios, according to Colliers.

Last year was ‘extraordinary because of the huge platform deals,’ Weiss said. ‘This year, I don’t expect to see another Logicor, although we should have deals in the €300m to €500m range. As a result, I would expect the overall logistics deal volume in Germany this year to be between €5b and €6b.’ (ssk)