Oxford, CPP Investments and Ivanhoe's Latest Logistics Deals
Oxford Properties Group is selling a 50-per-cent stake in a $1.2-billion portfolio of European warehouses to AustralianSuper, forming a joint venture with Australia’s largest pension fund manager to help ramp up its exposure to logistics and industrial properties.
In addition to buying half of Oxford’s warehouse assets, AustralianSuper will become a co-owner of M7 Real Estate, a European investment manager focused on the logistics sector that Oxford acquired in 2021.
Oxford Properties is the real estate arm of the Ontario Municipal Employees Retirement System (OMERS), the $134-billion pension fund manager that invests on behalf of more than 600,000 members who have worked for municipalities, school boards, transit systems and electrical utilities, among other employers.
The largest allocation of Oxford’s investments – roughly a third of its assets – is now in the logistics sector. The company is investing heavily in infrastructure that serves an expanding digital economy, and warehouses and related properties have performed relatively well in a period that has seen office and retail real estate hit hard by shifting habits around work and shopping.
The portfolio AustralianSuper is buying into is worth about €840-million ($1.2-billion) and comprises 76 urban logistics and distribution warehouses in Western Europe with 730,000 square metres of space. Oxford and AustralianSuper said the warehouses are near key distribution hubs in the United Kingdom, Denmark, France, Germany, the Netherlands and Spain. The properties are roughly 90-per-cent occupied.
“I think logistics will remain a cornerstone certainly of our European strategy,” Oxford chief investment officer Chad Remis said in an interview.
Logistics, which is broadly the business of storing and transporting goods, is a sector that has grown in popularity among large investors in recent years. That has made it more competitive, but the European logistics market is attractive to Oxford partly because it is more fragmented than in countries such as the United States, Mr. Remis said. More onerous regulations in Europe also make it harder to develop new properties, which means that buying the right properties in the right locations can potentially give investors such as Oxford an edge.
The M7 team has “incredibly deep relationships and understanding and ability to attract the types of buildings and the types of returns that we’re seeking. We’ve been building a pipeline for the last six to 12 months and are just going to go execute on that pipeline.”
Oxford has built its portfolio over the past few years while streamlining M7 from a company with 230 staff in 14 countries to 150 people focused on six core markets and managing €5.5-billion ($8.1-billion) worth of assets. The process to bring in an institutional partner with capital to help the business grow was launched in earnest last year, and Oxford ultimately chose AustralianSuper.
The two partners are aiming to boost the portfolio’s gross asset value to €4.5-billion ($6.7-billion) over a period of three to five years.
The partnership “brings a significant and, importantly, a like-minded capital partner alongside us into both the M7 portfolio and the M7 Real Estate platform … while providing fresh capital from both partners to grow the platform as we enter into a new real estate cycle,” Joanne McNamara, Oxford’s head of Europe, said in a statement.
Paul Clark, AustralianSuper’s head of European real assets, said in a news release that the pension fund manager has been tracking the urban logistics and distribution sector in Europe “for several years to find the right portfolio that meets our ambitions.”
On Monday, Oxford Properties put out a press release on this deal:
- AustralianSuper and Oxford aim to grow the venture to €4.5 billion in three to five years
- The portfolio comprises c.730,000 sqm of high-quality urban logistics and distribution warehouses across 76 assets in western Europe
- As part of the new strategic partnership, AustralianSuper will also co-own the M7 Real Estate platform with Oxford
LONDON
AustralianSuper, Australia’s largest superannuation fund, and Oxford Properties Group (“Oxford”), a leading global real estate investor, developer and manager, today announce a new strategic partnership that aims to build a significant industrial and logistics venture across Europe, which will be managed by M7 Real Estate. AustralianSuper has acquired a 50% stake in Oxford’s c. €840 million European industrial and logistics portfolio (the “Portfolio”) and in M7 Real Estate, the market leading European investment and asset management business that was acquired by Oxford in 2021.
The joint venture is the first between AustralianSuper and Oxford and brings together two like-minded global institutional investors managing a combined €270billion of long-term capital on behalf of over four million pension fund members.
The partnership will provide further capital to fund the growth of the Portfolio, known as the European Supply Chain Income Partnership (“ESCIP”), with a target of up to €4.5 billion GAV of high-quality ‘last mile’ and mid-box warehouses over the next three to five years.
The Portfolio currently comprises c.730,000 sqm high-quality urban logistics and distribution warehouses across 76 assets. The properties are well located in 19 of the most strategic urban ‘last mile’ and distribution hubs in the UK, Denmark, France, Germany, the Netherlands and Spain. With a diversified base of more than 200 tenants, the Portfolio is well-positioned to capitalise on increased occupier demand and rental growth throughout western Europe.
M7 Real Estate, as investment and asset manager, will be tasked to source and execute on new opportunities for the strategy targeting income-led exposure across the pan-European supply chain, with a continued focus on both smaller, multi-tenanted, core+ or value-add assets located near large cities and population centres, alongside a core+ mid-box strategy seeking investments into larger distribution and warehouse assets in key logistics corridors, throughout the six target markets of the venture.
The assets have strong environmental credentials and are focussed in submarkets that are characterised by acute supply demand tension, with 53% weighting to urban assets by estimated rental value (“ERV”). In the UK these include London and the South-East (19% of total ERV) and the Midlands (14%), as well as Paris (15%), Copenhagen (11%) and Barcelona (8.2%) in mainland Europe.
The Portfolio is c. 90% occupied and delivers a highly diverse and defensive income stream secured against 214 tenants, across a range of business types and geographies. No single tenant represents more than 5% of the total in-place rent.
Paul Clark, Head of European Real Assets at AustralianSuper, commented: “We believe urban logistics and distribution represents one the most compelling sector opportunities in European real estate today, and have been tracking the sector for several years to find the right portfolio that meets our ambitions, with strong fundamentals and significant growth potential. We are delighted to partner with the Oxford and M7 teams, investors with proven track records operating and growing high-quality logistics portfolios, to scale the ESCIP platform together using our collective expertise, generating long-term performance for members.”
Joanne McNamara, Executive Vice President, Head of Europe at Oxford Properties, commented: “This strategic partnership with AustralianSuper brings a significant and, importantly, a like-minded capital partner alongside us into both the M7 portfolio and the M7 Real Estate platform. This creates full alignment between all three parties from day one, while providing fresh capital from both partners to grow the platform as we enter into a new real estate cycle. We believe there are exciting prospects in this high conviction strategy, a major pillar of Oxford’s capital deployment ambitions in the region for 2025, with a compelling pipeline of investment opportunities which we expect to announce in short order.”
David Ebbrell, CEO of M7 Real Estate, commented: “Since its foundation M7 Real Estate has been a go-to partner for some of the world’s largest and most respected real estate investors wishing to access the European multi let and urban logistics sector.
“Having been acquired by Oxford Properties in 2021 and enjoyed a very successful partnership over the past four years, we are very excited at the prospect of now working alongside AustralianSuper as well. Not only is AustralianSuper’s investment into our business another huge endorsement of M7 Real Estate’s team, its expertise and long track record of creating value, the support of Australia’s largest superannuation fund also brings with it a commitment to invest significantly through our platform alongside Oxford Properties into the European industrial and logistics sector over the next few years, helping us achieve our own ambitions for growth.”
The transaction is expected to complete at the end of Q1 of 2025 and is conditional, amongst other things, on customary regulatory approvals. Eastdil Secured and Ashurst advised Oxford on the transaction.
This is a great partnership formed between Oxford Properties, OMERS' real estate subsidiary, and AustralianSuper, Australia's largest superannuation fund, to invest in European logistics properties.
The properties are sourced and managed by M7 Real Estate, the European logistics platform acquired by Oxford back in 2021.
Together, they are looking to grow the venture to €4.5 billion in three to five years.
Keep in mind, OMERS manages third party funds and typically partners up with like-minded investors so this deal is right up their alley with a well-known Australian fund with similar vision and long investment horizon.
Logistics properties whether in Europe or elsewhere remain coveted assets but the backup in yields and threat of an economic recession has impacted their value in the near term.
Still, over the long run, these remain great assets playing on the digitization of the economy and consumer strength.
In other logistics news. Ivanhoe Cambridge, CDPQ's real estate subsidiary announced this on LinkedIn:
PLP, our logistics platform in partnership with Macquarie Asset Management and The Peel Group, has acquired Astley Business Park, a prime 19-acre development site in Wigan, UK. With planning consent secured, PLP will develop a 360,000 sq ft logistics park comprising four best-in-class warehousing units. The site boasts excellent transport connectivity and is conveniently located near central Manchester.
“This acquisition confirms our commitment to European logistics, a major focus of our strategic plan”, said Ajay Phull, Managing Director, Real Estate, at Ivanhoé Cambridge. “We are developing cutting-edge logistics facilities near major urban centers and forging strategic partnerships to meet the rising demand for efficient delivery solutions. This investment aligns with our ESG goals, ensuring long-term resilience and value in our portfolio”.
Details on this deal can be found here.
Lastly, at the beginning of the month, IPE Real Assets reported that NBIM bought a 45% stake in $3.3bn US logistics portfolio from CPP Investments:
Norges Bank Investment Management (NBIM) has acquired Canada Pension Plan Investment Board’s 45% stake in a $3.26bn (€3.17bn) US logistics portfolio, with Goodman Group maintaining its 55% ownership in the portfolio.
The manager of the NOK19.73trn (€1.68trn) Norwegian Government Pension Fund Global said it has paid $1.07bn for 45% of the 1.3m sqm portfolio which has $888m in existing debt.
The US logistics portfolio comprises 48 buildings in southern California, New Jersey and Pennsylvania and five land plots.
Per Løken, the global head of unlisted real estate at NBIM, said: “We are excited about growing our logistics real estate exposure and entering into a partnership with Goodman.
“This investment aligns with our long-term strategy, and we think now is a good time to invest.”
Edward Lerum, the head of global logistics real estate at NBIM, said: “The portfolio exemplifies high-quality buildings in excellent locations.
“We have long-term conviction in the investment, and we also see appealing growth potential, given the restrictions on new supply in these locations.”
CPP Investments put out this press release on this deal:
- CPP Investments to realize $2.2B in net proceeds, crystalizing strong returns over the life of the investment
- CPP Investments and Goodman Group remain partnered on other global ventures
Toronto, Canada/ Sydney, Australia (Jan 3, 2025) – Canada Pension Plan Investment Board (CPP Investments) is expected to realize approximately US$2.2B in net proceeds from its investment in Goodman North American Partnership (GNAP). This represents the realization of the strong performance and success of the partnership. Goodman and CPP Investments retain partnerships across several markets.
“The success of GNAP has provided us with an opportunity to lock in strong returns for the CPP Fund and is emblematic of our ongoing partnership with Goodman,” said Max Biagosch, Global Head of Real Assets & Head of Europe for CPP Investments. “The proceeds from this transaction also give us the ability to redeploy capital towards new investment opportunities as our portfolio continues to grow and evolve alongside the global market.”
GNAP was established as a 45-55 partnership between CPP Investments and Australia’s Goodman Group, respectively, in 2012, with a mandate to invest in high-quality logistics and industrial property in key North American markets.
“We are proud of the success we’ve had with CPP Investments in GNAP across our global Partnerships,” said Greg Goodman, Goodman Group CEO. We look forward to maintaining our strong working relationship across asset classes and geographies.”
That $2.2B in net proceeds will help boost the returns of CPP Investments' real estate portfolio as this fiscal year closes.
Goodman now gets to own these assets with NBIM which manages GPIF's monster assets.
CPP Investments also announced that it has agreed to sell its 49% interest in four real estate joint venture projects with Chinese real estate company Longfor Group Holdings (Longfor) to an affiliate of Dajia Insurance Group. Net proceeds to CPP Investments from the sale would be approximately C$235 million before closing adjustments.
Alright, that wraps it up but it's been a busy start of the year in logistics deals at Canada's large pension investment managers.
Below, Real Asset Media focuses on the outlook for European logistic markets with the latest GARBE PYRAMID MAP for mid-2024 providing an overview of prime rents and yields for the 116 most important European submarkets for logistics properties in 24 countries.
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