Investec in Pan European Logistics deal
INVESTEC Property Fund (IPF), which raised R875 million through an accelerated book build yesterday, is acquiring the remaining interest in the Pan European Logistics (PEL) platform for €277 million (R4.55 billion) from funds managed by the Real Estate Group of Ares Management Corporation (Ares).
IPF placed 68.6 million new ordinary shares in the book-build at R12.75 per each yesterday. The group currently holds 42.9 percent in PEL and will increase its stake to 75 percent.
It will introduce a new strategic equity partner for the remaining 25 percent of the platform, a statement from IPF said yesterday.
PEL’s portfolio comprises 45 logistics properties, to be valued at €900m, with a total letting area of more than 1 million square metres, across six European countries.
The acquired stake would deliver an equity yield to IPF of 9 percent in euros and the deal was expected to close on Friday.
The deal, expected to increase IPF’s offshore exposure to 30 percent, was part of its intention to navigate the South African portfolio through the slowdown, while deploying capital to its offshore portfolios to benefit from positive underlying property fundamentals.
IPF chief executive Andrew Wooler said the acquisition was an opportunity to gain control of a property platform that had a demonstrated track record.
“In this case, delivering total returns in excess of 40 percent since our initial investment two years ago, with further opportunities still evident,” Wooler said. “This will give South African investors the opportunity to gain even more exposure to a focused pan-European logistics offering on the JSE.”
Wooler said it remained committed to South Africa and was repositioning its domestic assets and identifying opportunities to unlock greater value for tenants and shareholders.
“In parallel, we are deploying capital into strategic offshore platforms to exercise greater influence over our investments. Over the past 12 months we have exited minority positions, such as those held in Ingenuity, and sold down our holding in Investec Australia Property Fund,” he said.
Ares is a consortium of family offices well versed in the EU real estate sector. The in-country asset management team would also be retained, ensuring consistency in unlocking value via opportunities available in the portfolio, as well as pipeline opportunities.
Wooler said the European logistics sector was experiencing significant growth due to the shifting of supply-chain dynamics from the fast adoption of e-commerce, and constrained levels of new stock across the core Western European geographies.
Investec Property Fund joint chief executive Darryl Mayers said: “Despite this recent growth, the European logistics market remains less advanced than that of the UK, Asia and US, but is expected to grow strongly… in excess of 11 percent a year for five years.”
Rent levels in the sector were expected to experience a structural increase due to increasing demand.
Investec Property Fund shares closed 3.46 percent lower at R12.84 on the JSE yesterday.