Cadillac Fairview/OTPP and Boreal Acquire Big Logistics Portfolio in Italian Debut
The European logistics joint venture between the real estate arm of Ontario Teachers’ Pension Plan and Boreal IM marked its entry into Italy with a 200,000sqm portfolio purchase.
Cadillac Fairview & Boreal IM JV has invested an unspecified amount to acquire four assets and two development plots in the north of Italy from Blackstone-sponsored closed-end real estate funds managed by Kryalos SGR.
The venture has acquired the fully-let 198,000sqm portfolio and two development plots in a transaction carried out in a newly established fund managed on behalf of the joint venture, also by Kryalos.
The acquired warehouses comprise two assets in Pioltello and an asset each in Villanterio, Pozzaglio and Monticelli. The development opportunities comprise land in Monticelli ready to be developed into a 55,000sqm warehouse and another in San Bellino with a 44,000sqm buildable area.
Last year, the joint venture – formed to create a €3bn pan-European logistics portfolio – invested €250m to acquire an industrial park in Park Royal in West London and another in the Port of Rotterdam as the first two acquisitions for the newly created partnership.
The expansion into Italy follows acquisitions by the joint venture also in France and Spain.
Nikos Koulouras, partner at Boreal IM, said: “We are extremely happy to have completed our first acquisition in Italy, especially as the portfolio is very well located, fully-let and offers development potential to capture growing demand for logistics space.
”This portfolio gives us immediate scale in Italy and demonstrates our commitment to finding and creating value through market insight and proactive asset management. Having established the Kryalos SGR JV in Italy, we now look forward to growing the portfolio further.”
Jenny Hammarlund, EVP of investments, Cadillac Fairview, said: “The JV has entered the Italian market with conviction, having carried out detailed diligence and we are confident about the potential of the northern Italian logistics market.
”We are now in five of our six target markets, giving us diversified exposure to outsized returns in the European logistics market. We are very pleased to be continuing to build the portfolio at speed, particularly in this more challenging market.”
Paolo Bottelli, founder and CEO of Kryalos SGR, said: “We are glad to include the Boreal-Cadillac Fairview JV among our investors and we look forward to working side by side to implement our joint strategy in the northern Italian logistics market, where we have been a market leader for years.
”Kryalos’ strategy is to acquire assets with a view to building improvements and increased energy efficiency in order to cater to the evolving demands of occupiers. This transaction proves the value of that approach, and we are committed to continuing to look for further opportunities to do this with the JV.”
Cadillac Fairview put out a press release on this deal stating the fully-let 198,000 sq.m (2,127,000 sq.ft) portfolio was purchased from Blackstone-sponsored closed-end real estate funds managed by Kryalos SGR:
The joint venture between Cadillac Fairview/OTPP & Boreal IM, through a fund managed by Kryalos SGR, has acquired four assets and two development plots in the north of Italy, primarily within the Greater Milan region
The fully-let 198,000 sq.m (2,127,000 sq.ft) portfolio was purchased from Blackstone-sponsored closed-end real estate funds managed by Kryalos SGR
The deal is Boreal’s first in Italy
The Cadillac Fairview/Ontario Teachers' Pension Plan (“OTPP”) & Boreal IM joint venture (the “JV”) has completed its first transaction in Italy, the purchase of a portfolio that includes four fully-let and long-lease operational warehouses totalling 198,000 sq.m (2,127,000 sq.ft) and two development plots. The assets are primarily located in the Greater Milan region and all within the target market of the north of Italy.
The portfolio was acquired from Blackstone-sponsored closed-end real estate funds managed by Kryalos SGR, and the transaction was carried out in a newly established fund managed on behalf of the JV, also by Kryalos SGR. The expansion into Italy follows acquisitions by the JV in the UK, the Netherlands, France and Spain over the past 18 months.
The standing assets include:
In Pioltello, east of Milan and near Linate airport, two warehouses of around 57,000 sq.m (612,000 sq.ft) that are fully let to DSV as their Italian headquarters. The warehouses are on a 152,000 sq.m (1,636,000 sq.ft.) site which benefits from a low coverage of only 33% and direct access to a railway line connecting Milan to northern Europe.
In Villanterio, south of Milan, a 55,000 sq.m (587,000 sq.ft) warehouse that was constructed in three phases – 2013, 2016 and 2020 – has strong ESG credentials, including LEED Gold certification, and benefits from a licence allowing the storage of hazardous goods. The asset is fully let to L’Oreal and serves their national distribution.
In Pozzaglio, between Milan and Bologna near Cremona, a 29,000 sq.m (307,000 sq.ft.) well-maintained warehouse originally constructed in 2011. The asset is fully let to Walcor, an Italian chocolate manufacturer.
In Monticelli, south of Milan, a warehouse constructed in 2008 with a leasable area of 58,000 sq.m (621,000 sq.ft). Fully let to Whirlpool, it is currently undergoing approximately €1m of capex works to improve the asset, including installing LEDs throughout.
The development opportunities include:
In Monticelli, adjacent to the Whirlpool asset, a land plot ready to be developed into a 55,000 sq.m (589,000 sq.ft) BREEAM Excellent warehouse.
In San Bellino, between Venice and Bologna, a development land plot with a 44,000 sq.m (474,000 sq.ft) buildable area. The asset includes a further site currently let to Amazon as on-ground truck and car parking, serving their neighbouring multistorey warehouse.
All of the assets and sites benefit from easy access to the main highways, including the A1 which connects northern and southern Italy (Villanterio, Monticelli); the E70 connecting Turin with Venice (Monticelli and Pozzaglio); and the A13 that runs from Padua to Bologna (San Bellino).
Cadillac Fairview, Boreal and Kryalos are dedicated to implementing sustainable practices and ESG initiatives across the portfolio on behalf of the JV. CRREM analyses will be conducted on the assets in addition to the exploration of PV installation. Boreal will also implement energy performance improvements such as LED lighting and pursue BREEAM in-use certification.
The two developments, which will start in the near future, will target minimal embodied and operational carbon and BREEAM Excellent certification.
Cadillac Fairview, Boreal and Kryalos were advised by Linklaters, JLL and PwC. On the sell side, CBRES, DILS, Gattai and 5Lex were retained as advisors.
Nikos Koulouras, Partner at Boreal IM, commented: “We are extremely happy to have completed our first acquisition in Italy, especially as the portfolio is very well located, fully let and offers development potential to capture growing demand for logistics space. This portfolio gives us immediate scale in Italy and demonstrates our commitment to finding and creating value through market insight and proactive asset management. Having established the Kyralos SGR JV in Italy, we now look forward to growing the portfolio further.”
Jenny Hammarlund, Executive Vice President, Investments, Cadillac Fairview, said: “The JV has entered the Italian market with conviction, having carried out detailed diligence, and we are confident about the potential of the northern Italian logistics market. We are now in five of our six target markets, giving us diversified exposure to outsized returns in the European logistics market. We are very pleased to be continuing to build the portfolio at speed, particularly in this more challenging market.”
Paolo Bottelli, Founder & CEO of Kryalos SGR, commented: “We are glad to include the Boreal-Cadillac Fairview JV among our investors and we look forward to working side by side to implement our joint strategy in the northern Italian logistics market, where we have been a market leader for years. Kryalos’ strategy is to acquire assets with a view to building improvements and increased energy efficiency in order to cater to the evolving demands of occupiers. This transaction proves the value of that approach, and we are committed to continuing to look for further opportunities to do this with the JV.”
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Notes to editors
About the Cadillac Fairview & Boreal IM JV
Cadillac Fairview partnered with Boreal IM in 2022 with the aim of assembling a €3 billion pan-European logistics portfolio and has already transacted on nearly €1 billion of deals, with assets in the UK, the Netherlands, France, Spain and now Italy.
About Boreal IM
Boreal is a pan-European investment management firm founded by its Partners, who on average bring over 18 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. It is headquartered in London and has staff in France in the Netherlands.
Boreal analyses macroeconomic trends and paradigm shifts to identify thematic investment opportunities across Europe. Boreal’s current investment focus is logistics and light-industrial properties across Europe. Boreal is focused on assets across core European locations where fundamentals support the competitive demand for logistics, targeting properties across the spectrum, from standing assets to ground-up development.
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.
About Cadillac Fairview
Cadillac Fairview (CF) is an owner, operator, investor, and developer of best-in-class real estate across office, residential, logistics, life sciences and mixed-use asset classes. CF invests in communities with like-minded partners, including Stanhope and Boreal in Europe, Lincoln Property Company in the U.S., Hines in Asia and Multiplan in Brazil. CF is owned by Ontario Teachers' Pension Plan (OTPP), which has net assets of $247 billion.
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. Visit www.cadillacfairview.com for more information.
About Kryalos SGR
Kryalos SGR is one of the most active players in the Italian real estate market and among the SGRs "Significant by size" according to the definition contained in the Bank of Italy Regulation, managing €12 billion of AUM with a team of 110 professionals. Kryalos SGR offers transaction management, fund and credit management, development and advisory services and is partner to Italian and international leaders.
Go back to read an earlier comment of mine on how OTPP bifurcated Cadillac Fairview, internalizing its global real estate department.
The push is on to expand its global real estate footprint and expand into red hot sectors like logistics.
In order to do this, they need to leverage off their partnerships and enter into join ventures.
As the press release states, Cadillac Fairview partnered with Boreal IM in 2022 with the aim of assembling a €3 billion pan-European logistics portfolio and has already transacted on nearly €1 billion of deals, with assets in the UK, the Netherlands, France, Spain and now Italy.
This logistics portfolio in Northern Italy, the epicenter of Italian industry, is exactly the type of asset OTPP needs to acquire to continue diversifying its real estate portfolio away from Canada and into the right sectors too (away from retail).
It was acquired from Blackstone-sponsored Kryalos SGR is one of the most active players in the Italian real estate market.
Partnering up with Boreal IM allows Cadillac Fairview/ OTPP to leverage off their expertise and network:
Boreal is a pan-European investment management firm founded by its Partners, who on average bring over 18 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. It is headquartered in London and has staff in France in the Netherlands.
Boreal analyses macroeconomic trends and paradigm shifts to identify thematic investment opportunities across Europe. Boreal’s current investment focus is logistics and light-industrial properties across Europe. Boreal is focused on assets across core European locations where fundamentals support the competitive demand for logistics, targeting properties across the spectrum, from standing assets to ground-up development.
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.
As a reminder, in late June, Boreal IM & Cadillac Fairview JV completed a forward purchase in Madrid’s largest logistics market:
- Boreal IM & Cadillac Fairview JV acquires a 54,500 sq.m warehouse currently under development in Alcalá de Henares for c. €45m
- Set for completion by the end of 2024, the warehouse is expected to be certified BREEAM Excellent
- The transaction represents the JV’s third acquisition in Spain
Boreal IM & Cadillac Fairview JV acquires a 54,500 sq.m warehouse currently under development in Alcalá de Henares for c. €45m
Set for completion by the end of 2024, the warehouse is expected to be certified BREEAM Excellent
The transaction represents the JV’s third acquisition in Spain
The Boreal IM & Cadillac Fairview joint venture (the "JV") has completed its third transaction in Spain, with the forward purchase of a warehouse in Madrid’s largest logistics market for c. €45m, due to complete in 2024.
Acquired from established developer Pavasal, the 54,500 sq.m (586,600 sq.ft) asset is located in Madrid’s A-2 logistics corridor. It is targeting a BREEAM Excellent rating, complete with a rooftop photovoltaic installation and electric vehicle charging.
The acquisition takes the JV’s Spanish portfolio to 100,000 sq.m (1.1 million sq.ft), with further assets in Bilbao and Barcelona. Nikos Koulouras and Xavier Aubrun, who spearheaded the transaction, have a sizeable track record in the Spanish market, having made 12 investments totalling €500m in the logistics space there prior to joining Boreal.
The asset is located within the second ring of Madrid in Alcalá de Henares, one of Spain’s most established logistics clusters connecting Madrid to Barcelona. Also known as the Henares Corridor, it accounted for 75% of Spanish logistics leases signed in Q1 2023, according to BNP Paribas Real Estate. Other occupiers in the area include Amazon, Carrefour, Telefonica, Lidl, and Conforama.
In addition to the highest sustainability credentials, the asset will have a flexible design and layout allowing it to cater to requirements ranging from 5,000 sq.m (53,800 sq.ft) to 50,000 sq.m (538,200 sq.ft).
Boreal IM was advised by BNP Paribas, Linklaters, Hollis Global and PWC.
Nikos Koulouras, Partner at Boreal IM, said: “We are very pleased to be partnering with Pavasal on this development. Spain is a key market for us, with strong fundamentals as well a low e-commerce penetration relative to other leading European economies. The Henares Corridor is a fantastic location and its appeal to both occupiers and investors is illustrated by its high leasing and transaction volume. Our team has significant experience and local contacts in Spain and we will continue to look for new opportunities there, building on the robust foundation created with our acquisitions in Barcelona and Bilbao over the last year.
Jenny Hammarlund, Executive Vice President, Investments, Cadillac Fairview, said: “This acquisition underlines our joint belief in the fundamentals of the Spanish market and Boreal’s ability to capitalise on opportunities in the region. We’re glad to now have a foothold in the Madrid logistics market, complementing our existing portfolio, and to add to our stable of BREEAM Excellent assets.”
On this Italian deal, Jenny Hammarlund, Executive Vice President, Investments, Cadillac Fairview, said: “The JV has entered the Italian market with conviction, having carried out detailed diligence, and we are confident about the potential of the northern Italian logistics market.
We are now in five of our six target markets, giving us diversified
exposure to outsized returns in the European logistics market. We are
very pleased to be continuing to build the portfolio at speed,
particularly in this more challenging market.”
The European logistics market is very active and I too am very confident in the potential of the northern Italian logistics market.
Logistics and multi-family remain the two areas real estate groups at large Canadian pension funds are most heavily invested in.
I don't see this changing any time soon.
OTPP is catching up to its peers in terms of geographic/ sector diversification so I expect them to be a lot more active in the international space over the next five years.
Below, for the second year in a row BCI Global conducts a survey among Europe’s leading logistics real estate developers, investors and experts about their expectations for the Logistics Real Estate Markets in Europe in 2022. Take the time to listen to this presentation, it's very interesting.
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