Moorfield Ramps Up Countercyclical Open Storage Play
UK fund manager Moorfield has dramatically upscaled its industrial open storage play as the fast-growing UK institutional market plays catch-up with the U.S.
Bought for Moorfield Real Estate Fund V, the deal adds four sites to its joint venture platform with Peloton Real Estate. The £26M transaction takes the portfolio from 13 to 50 acres across six sites.
The partners have another 10 sites under offer, which would add another 20 acres and are racing toward a £90M portfolio after just 10 months in business.
IOS has become the star of U.S. institutional real estate investment as other, more traditional sectors have wobbled. It is a classic countercyclical play: The sudden slackening of economic activity has generated demand for places to stash underutilised assets.
During the economic downturn following the 2008 Great Financial Crisis the U.S. IOS sector mushroomed into a $200B asset class. GreenPoint Partners is among the latest wave of firms to take an aggressive approach to expansion, launching a $500M platform.
The UK seems to be following. Once a marginal asset class on this side of the Atlantic, IOS is now picking up speed in the UK thanks to demand for HGV, van and private car parking, recycling, storage of building materials, containers and scaffolding. The four latest Moorfield/Peloton purchases are leased to BCA, the car auction business.
Investors are also attracted by the potential for electric vehicle charging.
However, U.S. experience suggests the IOS market has trip hazards for unwary newcomers. A detailed understanding of the logistics, haulage and auto sectors is required, along with a keen appreciation of the kind of layout and location they need.
“The rapid success of our open-storage joint venture with Peloton, combined with the sector’s compelling fundamentals, give us strong conviction to keep growing the platform,” Moorfield senior investment manager Chris Perera said.
“We have a proven track record of institutionalising emerging sectors across the spectrum of alternative and operational real estate and believe we can replicate our success across other asset classes in open storage.
The four new sites are in Newport, Peterborough, Preston and Tewkesbury. They changed hands at a net initial yield of 13.1%.
Peloton and Moorfield were advised by Savills, Carter Jonas and WBD.
