AXA IM Real Assets has agreed a recapitalisation of just more than €1bn (£850m) of the Gramercy Property Europe logistics fund.
The French insurer is looking to logistics as a means of matching liabilities due to the relatively high and stable income that the sector provides. It mirrors German insurance giant Allianz Real Estate’s €500m tie-up with Dutch developer VGP last year, with the duo now looking to expand its central and Eastern European platform westward and aiming to grow its portfolio to more than €1.5bn.
US REIT Gramercy Property Trust manages Gramercy Property Europe and it is expected that the company’s European business will continue to manage and operate the fund as well as continue to expand.
The fund owns around 40 assets in the UK, France, Germany, Poland and Benelux totalling around 11m sq ft. Nearly all are single-let logistics properties. The portfolio has been built up predominantly through sale-and-leaseback deals and part of its attraction is its long-term unexpired lease lengths. Many of the buildings were developed bespoke for their occupiers and as a result are deemed to have a high probability of lease renewal.
Gramercy Property Europe was established at the end of 2014 with an initial €350m joint venture investment from hedge funds Fir Tree Partners, Senator Investment, EJF Capital and Gramercy itself. The deal will allow investors to cash in after a relatively short period and achieve a substantial return.
At the start of the year Gramercy appointed Eastdil Secured to explore options for the future of the fund that included bringing in a joint venture partner. Last summer the company explored an IPO but the strength of the market for high quality logistics assets has meant that the public markets were ultimately avoided.
The deal is a precursor to Blackstone’s disposal of its giant logistics platform as investors continue to look to buy into large logistics portfolios and platforms in order to build scale rapidly. Blackstone is undertaking a dual-track process for the €12bn business with Eastdil Secured also leading the process for a private sale and Goldman Sachs, Citi, Morgan Stanley and Bank of America Merrill Lynch are leading the prospective float.
To send feedback, e-mail david.hatcher@egi.co.uk or tweet @hatcherdavid or @estatesgazette
