London-based investor Tritax EuroBox has agreed to sell its asset in Łódź, Poland for €65.5 million to Savills Investment Management, acting on behalf of the Vestas European Strategic Allocation Logistics Fund (VESALF I), a fund raised solely from Korean institutional investors.
This is Savills IM’s second transaction on behalf of the VESALF I, a pan-European logistics investment fund launched in partnership with Vestas Investment Management in late November 2020. VESALF I is among the first ‘blind’ funds raised solely from Korean institutional investors to invest in European real estate and targets core/core-plus logistics assets across all key European markets.
VESALF I was represented in the transaction by JLL, Dentons, PwC and BNP Paribas Real Estate.
“We are delighted to have signed the second acquisition on behalf of VESALF I. The logistics market remains a bright spot within the real estate landscape, and Savills IM is very active in the sector. We have made a strong start to the year and look forward to further activity across Europe in the coming months,” Alistair Ennever, Director, Strategic Partnerships at Savills Investment Management said.
According to Tritax EuroBox, the €65.5 million price is 15% above the asset’s most recent valuation at 30 September 2020 and, based on the Company’s target gearing of 45%, delivering an attractive geared IRR of 16.5% to shareholders, above the Company’s long term target of 9% total return per annum.
The asset was originally acquired by the Tritax EuroBox in April 2019 and included a forward funding pre-let development opportunity to expand the existing site by a further 52,000 sqm, which was completed in May 2019. Since then, the asset has provided a period of stable income and capital growth.
With an unexpired lease term of 6.7 years to Castorama and no other imminent asset management opportunities remaining at the 101,000 sqm asset, the sale allows the Tritax EuroBox to realise gains through the profitable disposal of Łódź and recycle proceeds into higher returning asset management initiatives and its strong development pipeline, in line with the company’s refined strategy.
The sale represents a 4.95% gross initial yield, compared to a purchase cost of €55.0 million, which reflected a gross initial yield of 5.80%.
“The positive structural trends, which underpin the significant demand for logistics space, are expected to continue to strengthen further over the long-term. This profitable sale of one of our earlier asset purchases, 15% ahead of the latest book value, has delivered strong returns to our investors and is in line with our refined strategy of taking full advantage of these trends and crystalising profit, allowing us to redeploy capital into higher returning investment opportunities. These attractive value-add opportunities include asset management initiatives within our existing high-quality portfolio and also the funding of new assets from the attractive pipeline we have access to through our development partners. This development pipeline enables us to acquire new high-quality logistics assets in a more cost-effective manner than competing in the open market, delivering enhanced value to our shareholders,” Nick Preston, Fund Manager of Tritax EuroBox, commented.
“This transaction confirms the attractiveness of the Polish market for high quality, well-let logistics assets and demonstrates VESALF I’s ability to execute swiftly and efficiently to secure the right product. We expect to see Poland continue to be a highly attractive market for logistics investment for the remainder of the year and beyond, supported by strong liquidity and robust occupier fundamentals,” added Tomasz Puch, Head of Capital Markets, Poland, at JLL.
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