Ivanhoé Cambridge and Cadillac Fairview Beef Up European Logistics Properties

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IPE Real Assets reports that Ivanhoé Cambridge expands Hub&Flow logistics platform into Germany:

Ivanhoé Cambridge has expanded its Hub&Flow European logistics real estate platform into Germany with the acquisition of a 115,000sqm asset in Hamburg.

The real estate arm of Caisse de dépôt et placement du Québec said it has bought the fully-leased warehouse from ADF Asset Management, a South Korea based asset manager. Financial details were undisclosed.

In February 2020, Ivanhoé Cambridge bought a portfolio of 17 logistics assets in France as well as the portfolio’s Hub&Flow brand name from The Carlyle Group. The investment kicked off Ivanhoé Cambridge’s expansion in continental Europe and its plan to create a leading logistics platform focused on the key European hubs, the company said at the time.

Ivanhoé Cambridge has other European logistics ventures, such as the partnership with PLP for the development of a logistics portfolio in the UK and the European last-mile logistics venture with URBZ Capital.

Commenting on the latest deal, Christian Daumann, investments VP in Germany at Ivanhoé Cambridge, said: “With the acquisition of this first logistics asset in Hamburg, we continue to reinforce our presence in Germany, one of the key markets for our growth in Europe.

“The growth of logistics is a major focus of our strategic plan, which aims, in particular, to triple the size of our logistics portfolio in Europe by 2025. We will therefore continue to build a resilient and diversified portfolio across the European continent.” 

Ivanhoé Cambridge was advised in this transaction by Avison Young, Drees & Sommer and Allen & Overy.

Ivanhoé Cambridge put out a press release announcing it acquired a 115,000 m² logistics asset in Hamburg and expands its Hub & Flow portfolio into Germany:

  • 115 000 m² warehouse strategically located in Hamburg, crossroads of Northern Europe
  • An asset 100% leased to H&M Group
  • Ivanhoé Cambridge’s Hub & Flow logistics platform expands in continental Europe

Berlin, Germany, May 16th, 2022 – Ivanhoé Cambridge strengthens its Hub & Flow logistics portfolio with the acquisition of a warehouse in Hamburg, Germany, from ADF Asset Management, a South Korea based asset management firm. This transaction is the first for the Hub & Flow platform in Germany, contributing to the portfolio’s geographical diversification in continental Europe.

Located near the port of Hamburg, Europe’s third-largest port in terms of freight transport, this logistics asset with a total surface area of 114,760 m², on a freehold land, benefits from a strategic location in continental Europe.

Ideally positioned in the Allermöhe business park, one of Hamburg’s most established logistics areas, the warehouse benefits from access to a major highway network serving more than 7 million consumers.

The Hamburg warehouse has benefited from several initiatives to improve its ESG performance, such as the installation of solar panels on the roof, enabling to develop a power supply with immediate tracking of the energy created and consumed. Efficient office space, conference rooms and a roof terrace are further core components of the utilisation concept.

The asset is 100% leased to H&M Group.

“With the acquisition of this first logistics asset in Hamburg, we continue to reinforce our presence in Germany, one of the key markets for our growth in Europe”, said Christian Daumann, Vice President, Investments, Germany at Ivanhoé Cambridge. “The growth of logistics is a major focus of our strategic plan, which aims, in particular, to triple the size of our logistics portfolio in Europe by 2025. We will therefore continue to build a resilient and diversified portfolio across the European continent.”

This transaction is in line with Ivanhoé Cambridge’s logistics strategy in Continental Europe, which was initiated by the Hub & Flow portfolio in February 2020 and continued with the acquisitions of three projects currently under development in Roye (Hauts-de-France), Mer (southwest of Orléans) and Fos-sur-Mer (Bouches-du-Rhône) in France. This portfolio complements Ivanhoé Cambridge’s European logistics operations, such as the partnership with PLP for the development of a first-class logistics portfolio in the United Kingdom and the collaboration with URBZ Capital as part of its strategy dedicated to last-mile logistics in Europe.

Ivanhoé Cambridge was advised in this transaction by Avison Young, Drees & Sommer and Allen & Overy.

Let's begin by analyzing what Christian Daumann, Vice President, Investments, Germany at Ivanhoé Cambridge states in the press release:

“With the acquisition of this first logistics asset in Hamburg, we continue to reinforce our presence in Germany, one of the key markets for our growth in Europe. The growth of logistics is a major focus of our strategic plan, which aims, in particular, to triple the size of our logistics portfolio in Europe by 2025. We will therefore continue to build a resilient and diversified portfolio across the European continent.”

Ivanhoé Cambridge aims to triple the size of its logistics portfolio in Europe by 2025.

I looked into CDPQ's 2021 Annual Report which you can download here and checked out the geographic and sector exposures for Real Estate on page 47:

As you can see, over the last five years, exposure to the US, Europe and Asia Pacific increased while there was a decrease in Canada, mostly in Retail and Offices, while residential (multifamily) and especially logistics saw a sharp increase in exposure during that time.

The push toward logistics started before the pandemic and accelerated throughout it.

Now, tripling the size of its logistics portfolio in Europe by 2025 sounds ambitious but it's definitely achievable.

The time is ripe for European investments. The war in Ukraine and the ECB's loose monetary policy have sent the euro to multi-year lows relative to the US dollar and now is the time to take advantage of opportunities there across public and private markets:

Apart from the weak euro, however, there are secular reasons to invest in logistics properties throughout Europe, Germany and France being the focus but other areas too.

The rise in e-commerce is a global phenomena, as consumers become more comfortable buying things online, they have packages constantly shipped to their homes, you need logistics properties especially for that last mile (or kilometer) to deliver all these goods.

What about inflation roaring in Europe, especially in Germany? No doubt, there are serious economic headwinds in Germany and Europe, the same thing is going on in North America except the Fed and Bank of Canada are already raising rates and the ECB will follow suit.

But I don't want people getting caught up in short-term macro analysis.

Pensions funds invest in long duration assets (real estate and infrastructure) because they are able to weather these storms.

When it comes to logistics properties, focus on the secular theme and it remains a strong one.

In related news, IPE Real Assets reports Cadillac Fairview and Boreal IM will buy debut assets for €3bn European logistics JV:

The real estate arm of Ontario Teachers’ Pension Plan and Boreal IM have invested €250m to buy assets in the UK and Netherlands, as part of a plan to create a €3bn pan-European logistics portfolio.

Cadillac Fairview and Boreal IM have acquired an industrial park in Park Royal in West London and another in the Port of Rotterdam as the first two acquisitions for their newly created venture.

In London, the venture has acquired Nucleus, an estate of four fully-leased warehouses in Park Royal from fund manager Abrdn. The asset in Rotterdam, comprises six fully-leased warehouses.

Louis-Simon Ferland, founder and partner at Boreal IM said: “The acquisition of these assets marks the first step in our mandate with Cadillac Fairview. We will be focusing on assets across core European locations where fundamentals support outsized demand for logistics assets.”

Jenny Hammarlund, head of Europe and managing director at Cadillac Fairview said: “Cadillac Fairview is focused on expanding its global real estate holdings and Europe is a key part of this.

“Our partnership with Boreal enables us to team up with a best-in-class group of professionals with highly relevant experience, to build up a significant exposure to the European logistics and last-mile sectors, which continue to have good underlying fundamentals underpinned by strong demand for best-in-class ESG driven assets.”

Cadillac Fairview put out a press release on this deal:

  • The newly formed Cadillac Fairview and Boreal IM JV has acquired two industrial parks in Park Royal, West London UK and in the Port of Rotterdam, Netherlands

  • These two acquisitions are the first acquisitions in the JV formed by Cadillac Fairview and Boreal IM, which will seek to assemble a €3 bn pan-European logistics portfolio

  • Boreal IM was set up this year by former TPG Real Estate, Blackstone and Europa Capital execs

May, 20 2022 — The Cadillac Fairview & Boreal IM JV (the “JV”) has purchased the Nucleus Estate in Park Royal and an estate within the Port of Rotterdam for a combined total of €250m.

The acquisitions comprise a total of 1.1m sq.ft (109,000 sq.m) of logistics space and mark the JV’s debut acquisitions since being formed in early 2022.

Cadillac Fairview, the real estate arm of Ontario Teachers’ Pension Plan ($242bn AUM), which has actively been expanding into the UK and Europe in the last 18 months, earlier this year teamed up with Boreal IM, led by Louis-Simon Ferland, who oversaw the creation of Blackstone’s acquisition program in the European logistics sector and was responsible for the formation of Logicor from a start-up to a €12.5bn pan-European platform. to form a pan-European logistics and last mile focused JV. The JV will focus on major European geographies including the UK, Germany, France, Netherlands, Spain and Italy and can invest right across the risk spectrum to include standing assets and ground up development.

In London, the JV has acquired Nucleus, an estate of four warehouses in Park Royal from fund manager abrdn. Park Royal is strategically located between London Heathrow Airport and the capital and is London’s premier industrial estate, home to more than 1,700 businesses. Constructed between 1999 and 2003, the assets comprise a total of 131,000 sq.ft (12,000 sq.m) and are fully leased to a diverse range of occupiers including DPD.

In Rotterdam, the JV has acquired an estate of six warehouses in the heart of the Port of Rotterdam, Europe’s largest seaport. The warehouses – constructed in 2006 – comprise a total of >1m sq.ft (97,000 sq.m) and are fully leased to a range of occupiers involved in port-led distribution activities.

As part of a planned forward looking ESG strategy, the JV will be harnessing technology to measure and benchmark the carbon footprint of every asset, and will also look to upgrade the designs and energy systems of its assets.

Louis-Simon Ferland, founder and partner at Boreal IM said: “The acquisition of these assets marks the first step in our mandate with Cadillac Fairview. We will be focusing on assets across core European locations where fundamentals support outsized demand for logistics assets. Both of these acquisitions have been driven by our focus on making thematic investments by closely analyzing macroeconomic trends and identifying paradigm shifts. Our aim is to drive long-term returns for our investor and both of these deals have in place the right characteristics to deliver this.”

Jenny Hammarlund, head of Europe and managing director at Cadillac Fairview said: “Cadillac Fairview is focused on expanding its global real estate holdings and Europe is a key part of this. Our partnership with Boreal enables us to team up with a best-in-class group of professionals with highly relevant experience, to build up a significant exposure to the European logistics and last-mile sectors, which continue to have good underlying fundamentals underpinned by strong demand for best-in-class ESG driven assets. We look forward to working closely with Boreal to continue to grow this strategy over the coming years”

About Cadillac Fairview

Cadillac Fairview (CF) is a globally focused owner, operator, investor, and developer of best-in-class real estate across office, residential, logistics, life sciences and mixed-use asset classes. As the real estate arm of Ontario Teachers' Pension Plan, which has $242 bn of AUM, CF currently manages in excess of $35 billion of assets across Europe and the Americas, with further expansion ongoing into Europe and Asia.

Internationally, CF invests in communities with like-minded partners, including Stanhope and Long Harbour in the UK, Lincoln Property Company in the U.S., and Multiplan in Brazil. The company's Canadian portfolio comprises 68 landmark properties, including the Toronto-Dominion Centre, CF Toronto Eaton Centre, Tour Deloitte, CF Carrefour Laval, CF Chinook Centre and CF Pacific Centre.

Continually striving to make a positive impact in communities where it operates by promoting social connection, growth, and a sustainable future, CF's Purpose is Transforming Communities for a Vibrant Tomorrow.

About Boreal

Headquartered in London, Boreal is a pan-European investment management firm founded by its Partners, who on average bring over 17 years of industry experience across all sectors, geographies and transaction types. It is supported by a highly motivated and aligned team of skilled professionals focused on acquisitions, asset management and finance.

Boreal analyses macroeconomic trends and paradigm shifts to identify thematic investment opportunities. Leveraging the team’s experience, market knowledge and established networks, Boreal aims to create and to drive long-term value for its investment partners in a sustainable and responsible manner.

Following the pandemic, Cadillac Fairview is still in the early stages of diversifying its holdings geographically and by sector but it is moving very fast and these types of joint ventures with solid best-in-class partners are exactly what it needs to do to accelerate the diversification of its holdings.


The figures above are from OTPP's 2021 Annual Report which is available here (from page 56).

In Real Estate, diversification is the key and you need to be properly diversified across geographies and sectors, capitalizing on long-term trends.

In other news, Cadillac Fairview announced its commitment to achieve Net Zero emissions before 2050:

Aligned with its Purpose of Transforming Communities For A Vibrant Tomorrow, Cadillac Fairview (CF) is committed to supporting the transition to a low-carbon economy. A sustainable future is at the heart of the company’s Corporate Responsibility strategy, comprised of four key pillars: Our People, Our Partnerships, Our Communities and Our Planet.

CF is dedicated to taking action against climate change and has already reduced emissions by 56% since 2008 through CF’s industry leading Green at Work® program. Our go forward commitments include:

  • Achieve Net Zero emissions in CF’s real estate portfolio before 2050

  • Achieve an interim 35 per cent reduction target by 2030 of Scope 1 and 2 emissions in CF’s entire global real estate portfolio (from a 2017 baseline), within operational control, while measuring and managing Scope 3 emissions

  • Continue to achieve annual energy reductions per property

CF’s sustainability commitments support the global imperative to take action on climate change and meet the objectives of the Paris Agreement. CF’s emissions reductions goals are aligned with independent, third party decarbonization frameworks such as the Science Based Targets Initiative and the Carbon Risk Real Estate Monitor.  To substantiate its deep commitment to these goals, CF has embedded the targets in its organizational plans and objectives, and will publicly disclose the company’s progress in meeting targets. CF will re-evaluate targets annually to ensure alignment with the latest scientific information.

“Sustainability is not an objective sitting on the periphery of our business, it is core to who we are and our refreshed commitments reflect our identity. In 2008, we launched our industry-leading national sustainability program, Green at Work, which has already reduced emissions by 56 per cent, surpassing Canada’s national 2030 target. More recently, we reset our baseline year to 2017 and are now committed to reduce our emissions by an additional 35 percent by 2030, ” said John Sullivan, President & CEO, Cadillac Fairview.

In addition, CF is committed to adapting to the effects of a changing climate by evaluating climate risk at all properties  such as risks posed by extreme weather events. CF will further support a transition to a low-carbon economy  with focus on enabling low-emission transportation, such as biking and electric vehicles charging stations. 

As well, the company commits to managing the protection of natural resources through site-specific and measurable targets in the areas of waste, water and energy, and working with suppliers and its broader network to identify additional opportunities to reduce environmental impact. CF will continue to validate its sustainability efforts through independent, third-party certifications and benchmarks such as LEED, BOMA BEST and the Global Real Estate Sustainability Benchmark (GRESB), which ranked CF 1st in its reporting category in 2021.

“Building on the industry leading results that we have achieved to date, we continue to do our part to take action against climate change while protecting natural resources. We will do so in a diligent, transparent and scientifically credible manner. By doing so, we activate our purpose and make a clear commitment to the sustainability of our organization, our communities and our planet,” said Karen Jalon, Vice President, Sustainability, Energy & Smart Technology, Cadillac Fairview.

A detailed set of commitments and key performance indicators can be found here and on cadillacfairview.com.

I am glad to hear this and it is worth noting all of the Real Estate groups at Canada's large pensions are committed to achieving net-zero by 2050 or earlier. 

Ivanhoé Cambridge is certainly a recognized leader when it comes to sustainable investing:

It is also worth noting that all of Canada's large pensions are now invested in logistics properties throughout the world and this will continue to be a high conviction sector over the next decade.

Below, Christian Goebel, Co-Head Core / Core Plus Real Estate at Macquarie Asset Management, is a guest on BiTV. He explains why the European logistics market still has significant room to grow.

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