Record year looming for German logistics real estate

The year 2014 is certainly turning out to be the year of logistics real estate investment in Germany – we at REFIRE had countless discussions at the recent Expo REAL in Munich with companies – domestic and foreign – either in the throes of or planning their next acquisitions in the hot logistics sector. Colliers and other brokers also confirmed to us that the Germany logistics sector is heading for a record year.

Several companies are planning market entry or an expansion of existing operations in the German market. The Dallas-based investor and develop Hillwood announced its entry into Europe's logistics real estate market in a joint venture with major sovereign wealth funds. It said it will make direct and indirect investments of up to €1bn over the next three to four years "across major markets in central and western Europe through acquisitions, development projects and joint ventures with other developers."

In a statement on the move, Hillwood chairman Ross Perot Jr. commented, “Hillwood is very excited to enter the logistics real estate market in Europe. Unlike most investors recently interested in Europe, this is a long-term commitment based on building our business through acquisitions and development. We are comfortable doing this one building at a time.”

Its new business division called Hillwood Europe has already purchased existing buildings and development sites in Poland. The company's office in Germany will be in Frankfurt and will be led by Peter Schuijlenburg, formerly a Prologis manager and subsequently a partner at Palmira Capital Partners.

Hillwood is part of the Perot group of companies associated with Ross Perot, computer billionaire and erstwhile US presidential candidate. It is the second-largest owner of land for future logistics real estate development in the US, and is perhaps best know for its Alliance brand, such as AllianceTexas, AllianceFlorida and AllianceCalifornia.

Also active is TIAA Henderson Real Estate and Palmira Capital, who have put the new "Investoren-Club-Fonds German Logistics" fund on the market on behalf of a group of institutional investors. According to a press statement, the focus of investment will be "core and premium logistic assets" in Germany. These are to be located in "regions with gateway functions, sustainable future prospects, etc." The target price for each asset starts from €7m, with Palmira Industrial Management acting as property manager.

Also announcing their investment plans at the Expo REAL was Cologne-based Alpha Industrial, which has secured 250,000 sqm of land across Germany for the conversion and development of new logistics buildings. The company got the mandate through its role as development partner to an unnamed foreign investor.

The portfolio comprises around 740,000 sqm of land and around 277,000 sqm of built-up areas in industrial parks including logistics sections as well as a motorway service area.

In the eight sites in Germany, up to 250,000 sqm of land is available for development and construction work. Ulrich Wörner, technical director of Alpha Industrial, said: "In the current market environment it is increasingly important to identify land that can be developed for logistics." The company said that the deal will enable it to offer potential users the opportunity to drive growth in modern and well-situated buildings in an environment characterised by a shortage of space.

'Now, Alpha Industrial’s task is to realise the considerable potential of some of the land, which is either a brownfield state or will be ready for development following deconstruction measures,' Wörner added.

Also an active buyer is HIH Hamburgische Immobilien Handlung, which announced that acting on behalf of Warburg Henderson, it has acquired eight commercial properties with a total rental area of about 160,000 sqm. This is HIH's largest-ever property transaction, with developer DIBAG being the seller of the portfolio for more than €300mn. The majority of the transaction involved office buildings, but retail and logistics space was also included.

All eight properties will be held in the newly issued Warburg-Henderson Germany High Income Fund, a Special-AIF. The fund initiator said the core-plus-product is already fully placed on the equity side. Among other properties, the portfolio contains the majority of the Hanomag area in Hanover with more than 24,500 sqm of office space that was revitalized by DIBAG. The other properties are located in Munich, Frankfurt, Stuttgart, and other major cities in western and southern Germany.

British developer and asset manager SEGRO unveiled an ambitious plan to roll out major new investments in industrial parks and develop the segment to be on a par with its logistics property division. New business unit director Andreas Fleischer said the plan is to have a presence in all of Germany's 20 most important logistics hubs, and at the same tiem develop inudtrial parks on the outskirts of the Big-7 cities, with developments (and acquisitions) of 200,000 sqm planned annually. SEGRO views the 2 segments as being complementary, with peak rents capable of being re-defined through hybrid developments. SEGRO has assets under management of €5.6bn including its share in joint ventures, and properties with a gross lettable area of 5.8m sqm, generating annual rent of €331m.