AustralianSuper takes half stake in $1.4b European logistics portfolio
AustralianSuper has taken a half stake in a $1.4 billion European logistics and industrial property portfolio owned by Canada’s Oxford Properties Group, which the two investors aim to expand fivefold over as many years.
The $355 billion industry super fund has also acquired a 50 per cent stake from Oxford of M7 Real Estate, the investment and asset manager that will oversee the 76 assets – located in the UK, Denmark, France, Germany, the Netherlands and Spain – in the portfolio, known as the European Supply Chain Income Partnership.
AustralianSuper has $56 billion invested in real estate, 60 per cent of which is in Australia and the remaining 40 per cent invested internationally. Of that, more than $10 billion is invested in European assets including the King’s Cross Estate and the Canada Water regeneration projects in London.
The Oxford deal is the industry super giant’s first European logistics investment.
Europe’s growing e-commerce demand and the likely increased investment in domestic manufacturing and supply chains, along with a declining pipeline of supply in coming years, underpinned this initial deal as well as further likely growth, AustralianSuper’s head of European real assets Paul Clark said.
“The initial focus is very much on continuing to deploy into the core urban/mid-box logistics strategy across the six target markets,” Mr Clark said.
“As market conditions continue to evolve, we expect that there will be opportunities to broaden both the geographical and strategic scope of the partnership, and the M7 platform is well-placed to execute on opportunities to expand the strategy incrementally.”
A turning cycle
There’s also an opportunistic side to the deal. Super fund chief investment officers told The Australian Financial Review in a survey late last year that prices of commercial real estate assets were reaching attractive levels after a cycle that had triggered years of downgrades and even asset write-offs – including by AustralianSuper.
Meanwhile, rents on logistics assets in Europe have soared thanks to rising online consumption, and now the recalibration of global supply chains following the pandemic and heightened geopolitical tension has added to demand.
Oxford bought M7 Real Estate, a niche investment and asset manager that originally specialised in warehouse properties, from its founders in 2021. The business has helped many of the world’s largest private equity firms including Blackstone, Starwood Capital Group and Goldman Sachs’ asset management arm to buy up European warehouses.
The portfolio, which is about 90 per cent leased, is located in the UK, Denmark, France, Germany, the Netherlands and Spain and M7 will seek new acquisitions for the venture in those markets, the companies said.
The assets have strong environmental credentials and are concentrated in underserved submarkets, with a 53 per cent weighting to urban assets by estimated rental value (ERV).
In the UK these include London and the South-East (19 per cent of total ERV) and the Midlands (14 per cent), as well as Paris (15 per cent), Copenhagen (11 per cent) and Barcelona (8.2 per cent) in mainland Europe, the companies said.
The properties are leased to 214 tenants from a range of business types and locations. No single tenant accounted for more than 5 per cent of the total in-place rent, they said.
Within the industrial property sector, AustralianSuper has also invested in Moorebank Logistics Park, Australia’s largest intermodal logistics facility, the Craigieburn Logistics Estate housing a new Amazon Robotics fulfilment centre in south-east Melbourne, and the Wiri Logistics Estate in New Zealand.
The Oxford deal is expected to be completed by the end of the first quarter, subject to regulatory approvals.
Eastdil Secured LLC advised Oxford Properties on the transaction, while Savills Capital Advisors acted for AustralianSuper.
With Bloomberg
