GLP’s Gazeley Said Buying Goodman European Portfolio for €1B

Singapore-based Global Logistic Properties (GLP) is reported to be buying Goodman Group’s Central and Eastern European logistics portfolio in a deal said to be worth €1 billion ($1.08 billion).

Asia’s largest warehouse developer and fund manager is said to be acquiring the set of 40 distribution centres through UK-based logistics platform Gazeley, which GLP acquired for $2.8 billion just over two years ago to enter the European market.

The acquisition, which was first reported in React News, allows GLP to bolt the newly acquired portfolio onto its existing holdings in Europe, expanding its presence in the continent by 11 million square feet (1.5 million square metres) as well as adding a development pipeline of 16 million square feet.

With $66 billion of assets under management globally, GLP is pushing further into the continent five months after completing an $18.7 billion sale of US logistics assets to Blackstone.

Goodman Exiting Central and Eastern Europe

For Goodman, the sale marks its exit from Central and Eastern Europe as it switches focus to a smaller number of core markets, according to React News. When contacted by Mingtiandi concerning the reported portfolio sale, a Goodman spokesperson declined to comment.

Goodman is selling the properties, which are located in Poland, Hungary, the Czech Republic and Slovakia, from its €3.6 billion European Partnership Fund.

The reported sale comes just two days after the Australian logistics specialist reported a jump in operating profit of 14 percent for the second half of 2019 compared with the previous six months.

In announcing its most recent financial results, Sydney-based Goodman said that average occupancy across its assets under management stood at 98 percent globally as of 31 December. In the same report, the company projected that its total portfolio will reach A$50 billion ($34 billion) by June of this year, supported in part by a development pipeline valued at A$5 billion.

Goodman’s reported sale of its central and eastern Europe was revealed during the same week that the industrial developer announced that CPPIB would be investing a fresh $1.1 billion in a US partnership with the Aussie firm, with Goodman contributing another $1.4 billion to the joint venture.

During the second half of last year, Goodman earned 31 percent of its operating income from its A$9 billion in assets under management in the UK and continental Europe, while about a quarter of its income comes from its operations in Asia.

Competition for European Assets Heats Up

Singapore-based GLP is expanding its European presence as competition for logistics assets in Europe heats up with limited availability in the region pushing up rents.

Annual prime rental growth across the European market reached 2.4 percent in 2019, according to JLL’s February 2020 Global Market Perspective.

“Looking ahead, prime rental upward pressure across most European warehouse markets will be largely driven by shrinking land availability and continued occupier demand,” the report’s authors noted.

JLL’s research findings are in line with findings issued by Savills last year that reported a downward pressure on yields for European logistics assets as investors committed €12.2 billion of fresh capital to the sector in the first half of 2019 and occupiers leased a record 11.9 million square metres of new space.

Major Players Target Europe

With warehouses in Europe proving to be steady income-earners, major institutional investors are targeting the continental market as the growth of e-commerce drives demand.

Singapore’s sovereign wealth fund, GIC, ramped up its European logistics platform just two months ago by agreeing to acquire a 28 asset warehouse portfolio from Apollo Global Management for about €950 million.

GIC said that it will integrate the 1 million square metre portfolio into its existing pan-European warehouse platform P3 Logistic Parks.