The completion of a tender award for the first logistics area at the Adolfo Suárez Madrid-Barajas Airport City to P3 Group will help raise the value of GIC’s European logistics real estate platform to around US$9 billion in 2023, securing its place as one of Europe’s biggest logistics investors.
Wholly owned by GIC, P3 Group won the tender for the project pledging a EUR116 million investment offer and an upfront investment of EUR53 million. Aena will hold a 35% stake in the joint venture operator with the rest held by P3.
GIC acquired P3 Logistics parks from TPG and CDPQ’s real estate subsidiary Ivanhoé Cambridge for EUR2.4 billion in 2016, representing the year’s biggest European real estate transaction. P3 had already grown to become one of Europe's largest developers and managers of logistics properties, having more than doubled the portfolio size to 163 warehouses in nine countries from 2013 when TPG and Ivanhoé took over the portfolio.
Under GIC, P3’s portfolio rose in value to EUR7.98 billion at end-June 2022 with 298 yielding assets and development land of 3.6 million sqm. A further 10 were under construction worth another EUR200 million. In H1, P3 made EUR62 million of yielding acquisitions (Straubing in Germany and Deventer in the Netherlands) and one forward funding deal (Assen in the Netherlands).
P3 is not GIC’s only platform in European logistics. Global SWF estimates the total value of GIC's European logistics holdings to be around the EUR12 billion mark. In December 2021, it staged another mega-deal in the sector, buying out the EQT Exeter European Value Venture III for EUR3 billion, and acquiring its 2.2 million sqm of logistics property with 110 assets. The deal came alongside acquiring 328 US logistics properties with around 7 million sqm from EQT Exeter for US$6.8 billion and 45 Australian logistics assets from Blackstone for US$2.9 billion through its partnership with ESR in which it has a 80% stake.
In logistics real estate, state-owned investors have often bought out entire portfolios from other investors, rather than build up a platform and originate deals by themselves. Alternatively, they will seek joint ventures. Examples in 2022 included an agreement between Canadian public pension fund OTPP’s real estate subsidiary Cadillac Fairview signing a deal with Boreal IM to create a EUR3 billion pan-European logistics portfolio, starting with EUR250 million in an industrial park in Park Royal, West London and another in the Port of Rotterdam, followed by the acquisition of 15 warehouses in the Netherlands.
Meanwhile, CDPQ’s Ivanhoé Cambridge continued to expand its Hub & Flow European logistics portfolio, which it acquired in February 2020. In May 2022, it added a warehouse in Hamburg, Germany with 114,760sqm area. Hub& Flow complements Ivanhoé Cambridge’s partnership with PLP for the development of a logistics portfolio in the United Kingdom and its collaboration with URBZ Capital as part of its strategy dedicated to last-mile logistics in Europe. In September, Ivanhoé Cambridge formed a partnership with NVELOP to invest in logistics real estate opportunities, starting with a 72,000sqm brownfield logistics development project in Frankfurt. This was followed in November with a second development project with NVELOP Real Estate, based on a 48,000sqm brownfield site in Berlin.
M7 Real Estate, the European logistics platform of OMERS’s real estate arm Oxford Properties, expanded its portfolio in March 2022 with the acquisition of seven big-box logistics assets in the UK for EUR236 million. OMERS bought M7 in 2021 when it had a portfolio of 620 assets worth EUR4 billion.
Acquiring platforms and forging co-investment alliances in the European logistics market are not confined to Canadian pension funds. Last year, Norway’s Norges Bank Investment Management (NBIM) acquired a 50% stake in a UK logistics properties portfolio managed by Prologis for EUR250 million; Prologis owns the other 50% and serves as asset manager for the portfolio, which has 14 logistics properties in the UK with 207,000sqm of leasable area.