Today, CDPQ's real estate subsidiary Ivanhoé Cambridge announced 170,000 square meters leases in its Hub & Flow logistics portfolio in France:
Paris, France, May 30, 2023 –
Ivanhoé Cambridge, a global real estate leader, is proud to announce
that it has signed eight leases for assets of its Hub & Flow
logistics portfolio in France. These leases cover a total surface area
of nearly 170,000 square meters.
The Hub & Flow portfolio
currently comprises 17 logistics platforms across France with a total
surface area of some 510,000 square meters.
Originally acquired in February
2020, the portfolio has since been expanded through acquisition of two
assets for development in Mer (south of Orléans) and Roye (midway
between Paris and Lille), plus a new asset in Fos-sur-mer (near
Marseille). It has also been extended in Continental Europe with, among
others, the May 2022 acquisition of a 115,000 m² asset in Hamburg,
Germany, 100% leased to H&M Group. The total surface area of the Hub
& Flow portfolio in Europe is now 625,000 square meters.
“The Hub & Flow portfolio
is especially attractive to tenants because these logistics facilities
offer high quality and are strategically located, providing access to
major highways,” says Martin Chevallier, Senior Manager, Asset Management, France, Ivanhoé Cambridge. “The
closing of these leases further strengthens our position as a leading
player in the French logistics market and reaffirms our diversification
strategy in this industry.”
Back in September of last year, I discussed how Ivanhoé Cambridge partnered up with NVELOP to expand its logistics portfolio in Germany and provided little background for those who are not familiar with Hub & Flow:
In February 2020, Ivanhoé Cambridge acquired Hub&Flow, a portfolio of 17 logistics assets in the main hubs of Paris and Lyon, from The Carlyle Group:
Ivanhoé Cambridge has acquired a 430,000 m² (4,628,500 ft2)
logistics portfolio, as well as its brand name Hub&Flow, from The
Carlyle Group. It is one of the largest transactions in recent years in
France’s logistics real estate market.
The
portfolio, comprising 17 high-quality assets, ideally meets the
market’s expectations and needs in terms of surface area (10,000 to
40,000 m² / 107,639 ft2 to 430,566 ft2), technical
specifications and location. The assets are situated within France’s
logistics backbone, encompassing the country’s largest logistics hubs,
serving all consumer markets.
This
acquisition aligns with Ivanhoé Cambridge’s major transactions in
logistics platforms in North America, Latin America and in the
Asia-Pacific region, as well as the creation of PLP, an operating
platform in the United Kingdom.
Karim Habra, Head of Europe and Asia-Pacific, Ivanhoé Cambridge,
says: “This strategic investment marks a new chapter of our expansion
in continental Europe with the aim of creating a leading logistics
platform focused on the key European hubs. Like Hub&Flow, we intend
to invest in top-quality assets that can benefit from future value
creation. This portfolio, located at the heart of the main consumer
areas, will enable Ivanhoé Cambridge to respond impeccably to the very
strong demand generated by e-commerce.”
Peter Stoll, Managing Director and Head of the Carlyle Europe Real Estate team added:
“We are delighted to have been able to work with Ivanhoé Cambridge for
the sale of the Hub&Flow portfolio. This transaction marks the
culmination of a major acquisition and asset management effort that has
resulted in the creation of an institutional quality logistics portfolio
focused on the Paris and Lyon markets, benefiting from a buoyant market
environment in which we intend to remain active.”
Since then, Ivanhoé Cambridge has expanded its European logistics portfolio in Paris and other cities in France and more recently in Hamburg which was the first transaction for the Hub & Flow platform in Germany:
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.
Now, asChristian Daumann, Vice President, Investments, Germany at Ivanhoé Cambridge stated then: “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.”
And this is exactly what
they are doing, executing on their strategic plan to triple the size of
their logistics portfolio in Europe by 2025.
I'm glad Ivanhoé Cambridge has signed eight leases for assets of its Hub & Flow
logistics portfolio in France.
Logistics properties remain a very active area in commercial real estate as do multifamily properties.
Unfortunately, Office and Retail remain the biggest drags on commercial real estate portfolios especially in North America.
Last week, I spoke with CPP Investments' CEO John Graham who told me they took major writedowns in Office and Retail in their North America portfolio but some locations are doing better than others:
If you read the annual report, you'll see we try to put a
lot of rigor into our valuation process. I wouldn't make blanket
statements on private valuations. As I highlighted, there are some
markets that are still quite robust, the renewable energy and
infrastructure space, but Office is in a price discovery mode for sure,
trying to find a clearing price (bid-ask spread). As you highlighted,
one of the challenges is you can't do a transaction without the
financing up, you highlighted bad commercial real estate loans sitting
on the bank books and one of the implications of that is availability of
commercial credit going forward and is this going to amplify any type
of monetary policy in the broader market and I think that's a big
question. We are going to see a contraction of credit because of commercial real estate woes.
In
real estate, location. Some markets around the globe are in better
shape than others, for sure. We see it in our data. Some of our offices
in Hong Kong, Dubai and London are almost back at pre-Covid levels of
attendance whereas n North America, we are probably sitting at 60%
attendance.
For us, we took some big markdowns in our US office
portfolio and in the retail portfolio too. Our portfolio is class A,
higher quality buildings, we are not going to sell, we are going to wait for supply and demand to come back in equilibrium. We do believe they will come back in equilibrium, but for lower quality buildings, it will be problematic for a long time.
I suspect the same is going at Ivanhoé Cambridge, they are looking at their immense global portfolio, writing down assets where warranted.
As I said, logistics and multifamily remain hot areas but if we head into a major global downturn over the next 6 to 12 months, even those portfolios will experience some challenges.
Remember, no large Canadian pension fund has gone through a 70s style prolonged global downturn with the public/ private portfolios they have, so it will be interesting to see how they navigate through a major global recession which lurks for a couple of years.
I know, as long as the Nasdaq led by a few AI stocks keeps grinding higher, we will avert a major recession.
I wouldn't bet on this and as far as France specifically, its credit rating was recently reduced to negative from stable by Scope Ratings,
raising questions about President Emmanuel Macron’s efforts to spur
growth and reduce a crisis-swollen debt burden.
Europe makes me very nervous these days, we can probably coast by the summer and then going into the fall and winter, I fear the worst lies ahead.
Still, any downturn in Europe, the US and elsewhere will present Canada's large pension funds opportunities to seize opportunities as they arise.
In other related news, Ivanhoé
Cambridge was recognized as the Global Real Estate Investor of the Year at
the 2023 IPE Real Estate Global Awards, winning a total of nine
accolades:
We were honoured to win the Global Real Estate Investor of the Year award at the 2023 IPE Real Estate Global Conference & Awards, held May 16th in Milan.
This award recognizes the work
and professionalism of all our teams globally, and we salute the daily
commitment of the women and men who implement our strategy. It
particularly highlights our achievements in recent years and the
successful transformation of our business model to prioritize our role
as an investor and to reposition our portfolio in the most promising
sectors.
The jury commented: “There is so
much that is being done right at Ivanhoé Cambridge, that one does not
know where to start. In the past two years alone, it has truly stood out
by demonstrating extreme agility in massively repositioning its
footprint in response to post-COVID structural changes in the global
real estate market.”
Over the past three years, our
strategic transformation materialized through 250 transactions totalling
C$27 billion. Our C$77 billion portfolio is now more geographically and
sectorally diversified, thus strengthening our resilience and
performance. In fact, more than half of our 2022 performance was
generated by investments less than five years old.
Our investment strategy widely recognized
Since 2020, portfolio construction has been at the heart of our transformation, and we were proud to receive the Portfolio Construction
award. In particular, the members of the jury highlighted that our
“portfolio optimization is very strong, based on forecasting and
comparisons between underwriting, asset managers and appraisers”.
Indeed, we embrace a perpetual cycle where we define, test, and
challenge our convictions while quickly transitioning to the optimal
portfolio allocation.
Our global investment strategy received top honours in the Opportunistic and Value-added
categories. These were welcome recognitions as our opportunistic
approach accounts for more than half of our investment plans over the
next four years, and our value-added strategy represents 11 % of our
efforts.
In 2022, Ivanhoé Cambridge
invested and committed more than C$ 6 billion in new opportunistic
investments and developments and more than C$ 2.5 billion in new
value-added strategies. This mainly included commitments in residential,
logistics, and projects and properties linked to life sciences and
technology in a large variety of markets.
Ivanhoé Cambridge also won three regional awards:
Investment in Asia Pacific where
we committed more than C$3.2 billion and completed 15 transactions,
with a focus on the residential, logistics, and life sciences sectors.
North America and Investment in North America,
our portfolio’s largest region by far. In 2022, we invested C$10
billion and completed 34 transactions as we focused on diversification
and resiliency while embedding ESG at every step.
These accolades shine a spotlight
on our diversification strategy and are a testament to the expertise
and drive of our local teams.
Our performance over the last few
years shows that we are now positioned in the right growth sectors and
that we are fully capable of weathering headwinds. Our new
organizational structure based on geographical hubs, implemented early
in 2022, was instrumental in giving us greater flexibility and increased
synergies in our portfolio-building and investing strategies.
Sustainable investment at the heart of our mission and vision
Our desire to rethink the real
estate of the future has also led us to fully integrate sustainable
investment and ESG factors into our decision-making. Our commitments and
our results in that field were lauded by the jury as we won the ESG award and the Environmental Sustainability award.
Our ambition remains to be
carbon-neutral by 2040. Our efforts and actions in recent years have
already yielded results. By the end of 2022, we had reduced the carbon
intensity of our portfolio by more than 30% compared to 2017, and we
made more than C$3.3 billion in new low-carbon investments between 2020
and the end of 2022. Finally, 60% of our properties have received at
least one “green” certification in recent years.
Our commitment, however, is not
limited to environmental and climate issues. We are also looking to make
a meaningful and lasting difference within our communities by promoting
diversity, equity and inclusion (DEI) and increasing our impact on
affordable housing.
Going forward, we intend to
maintain this innovative approach to sustainable investment for the
benefit of our property occupants and employees. We will continue to
optimize our portfolio to meet the needs of tomorrow while seeking to
achieve superior relative performance in order to create value for our
depositors.
I commend all of Ivanhoé
Cambridge's employees and their leader, Nathalie Palladitcheff and their COO Michèle Hubert who recently discussed their agility and evolution.
I would say the biggest thing Nathalie and her team did was reorient this massive portfolio away from non-performing assets in retail into growth assets like logistics, residential, life science and other niche and growing assets.
All of Canada's large pension funds have done this including Cadillac Fairview, OTPP's real estate subsidiary, which is in the midst or repositioning its portfolio geographically and by sector.
Below, Nathalie Palladitcheff, Ivanhoe Cambridge CEO, joins ‘Squawk on the
Street’ to discuss the state of the global real estate market and
corporate real estate stress.
Second, Breaking Points' Krystal and Saagar discuss commercial real estate taking major losses as the reverberations from the pandemic continue, stating LA, Washington and other cities are seeing a collapse in office real estate.
Also, Breaking Into CRE discusses the domino effects of rising interest rates on commercial real estate in 2023. Over the past few weeks, CBRE released their Q1 2023 figures for each of the 4 major real estate product types (multifamily, industrial, office, & retail) along with their US Capital Markets and US Lending Figures reports, each of which included some really interesting insights into the state of the commercial real estate market and what's going on in the industry right now.
Lastly, Patrick Carroll, Carroll Founder and CEO , joins 'Squawk on the Street' to discuss signs of weakness in the housing market, the commercial real estate crisis, and the repurposing office buildings as more people work remotely.
Again, I want to stress that most of the destruction taking place in commercial real estate is in specific markets and in class B and C buildings that are obsolete.
But if we do see a major global economic recession that lingers for a few years, no sector or geography will escape the carnage in commercial real estate. And let's hope we never see another pandemic during our lifetime!
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