7 Months Of European War Hasn't Dented Investor Confidence In Euro Sheds
The Russian invasion of Ukraine in February 2022 feels a long time ago, and a lot has happened since. Ukraine now has Russia on the retreat.
Seven months of conflict helped to screw up economic prospects in the UK and most of Western Europe as President Vladimir Putin used oil and gas prices to exert pressure on Ukraine’s allies.
But large property deals are still happening. A series of high-value transactions suggest the Russia-Ukraine War has yet to make an equivalent impact in the main European markets, several of them heavily exposed to Russian economic pressure.
Prologis has acquired a European last-mile warehousing portfolio from Crossbay, the urban logistics platform of MARK, the UK-based but pan-European real estate investment manager earlier known as Meyer Bergman. It paid €1.6B.
It is one of a growing list of supersized European logistics transactions to have completed this year despite the war, including Investec’s €1.5B Project Portland.
The 12.3M SF Crossbay portfolio includes 128 warehouse buildings and six development sites in Italy, the Netherlands, Spain, France, Germany, Belgium and Poland.
The sale to Prologis, which includes 128 logistics facilities and six new developments, has delivered over 30% returns for Crossbay's first investors, which included global investment giants Nuveen, Credit Suisse, Townsend Group and Qinvest.
Crossbay plans a second urban logistics vehicle to embrace the UK, Portugal and the Nordic region.
The transaction is on behalf of Prologis European Logistics Fund.
The appeal of the portfolio was its tempting list of key infill locations. These include Rome and Milan, Amsterdam and Rotterdam and the key German markets of Nuremberg and Berlin, along with the Polish city of Lodz.
Close to major city centres, about 85% of these new properties can service areas with a population of more than 1 million in approximately 30 minutes. The facilities are 95% occupied and expand Prologis’ customer base with more than 100 new customers.
The return of Cold War-like geopolitics is almost certainly not helpful for investment or business, as experts were quick to point out.
But it became clear that the effect of sanctions on Russia, and the economic retaliation inflicted on Western Europe by Putin, could make central European warehouse real estate more, not less, attractive.
Disrupted supply chains and the need to add resilience provided spurs to invest in an already fast-growing and undersupplied logistics sector.
Analysis by DBRS Morningstar published this week suggested urban logistics will weather whatever economic storms the war produces, outpacing rival sectors.
“Although the sector is not completely sheltered from the current economic challenges, DBRS Morningstar views the light-industrials and logistics space as one of the most resilient in the medium term among other commercial real estate property types as the drivers that have expanded the logistics landscape continue to influence the market. The credit outlook for CMBS transactions secured by light-industrial and logistics properties will remain stable”, DBRS Morningstar Senior Analyst Violetta Volovich said.
Clifford Chance and JLL advised Prologis in this transaction. MARK was advised by Jones Day, CBRE and Eastdil.
