DFI And Argo Eye £400M Logistics Opportunities After Sector Reprices
Deutsche Finance International has launched a UK urban logistics platform in a joint venture with Argo Real Estate, with the £177M acquisition of two portfolios in separate transactions.
The portfolios have seeded DFI’s UK urban logistics platform with circa 1M SF across 11 assets located in sites including London, the South East and Manchester. The assets are 90% occupied, with a single vacant asset where a repositioning will be undertaken, the companies said.
DFI said that the platform will aim to build a portfolio worth around £400M over the next few years.
The assets range from institutional-quality urban warehouses, such as a 147K SF facility in Theale, which is let on a long lease to Amazon, through to those on shorter leases. The overall portfolio’s current market rent is over 80% above the average passing rent, with a weighted-average unexpired lease term of 5.7 years and tenants including Royal Mail, Greencore, GXO Logistics and Aldi.
DFI and Argo have committed over £30M of capital expenditure investment to create further value and ensure optimum investment liquidity. The upgrades are focused on enhancing the facilities and improving ESG performance, targeting an EPC A rating on each asset, as well as net-zero carbon in operation.
The JV is currently progressing a short-term to midterm investment pipeline to build the platform further, DFI said.
“We have been monitoring the European logistics sector for some time and the recent rerating has provided us with an opportune moment to enter the market via the acquisition of two UK portfolios, capitalising on the geography and sector where values have repriced fastest,” DFI Vice President Jonni Glick said in a statement.
He said that DFI believed there was a strong opportunity to create further value through asset management to capture substantial rental reversion potential and by investing capital expenditures to improve the environmental performance of the properties.
“We are excited to buy these two portfolios, offering quality core plus assets underpinned by strong fundamentals, in supply constrained markets with structural tailwinds and at sub replacement cost," Argo Real Estate CEO Crispin Gandy added in the launch statement.
