Charoen Sirivadhanabhakdi’s FLT is stacking up the logistics assets in Europe and Australia
Frasers Logistics and Industrial Asset Management has entered into agreements with subsidiaries of Frasers Property to acquire 12 freehold logistics properties in Germany and Australia on behalf of Frasers Logistics & Industrial Trust (FLT) at a value of A$644.7 million ($451 million), according to an announcement by the Singapore-listed trust manager today.
Under the terms of the deal with Frasers’ Property, which is the sponsor of the REIT and the parent of the trust’s manager, Frasers Logistics & Industrial Trust (FLT), would increase the value of its industrial real estate portfolio to A$3.5 billion, as the growth in e-commerce continues to drive demand for big sheds.
The sale to FLT, which still requires approval by the REIT’s unit-holders, comes just over 16 months after Frasers Property paid €285.2 million (then $353 million) to acquire German developer Alpha Industrial, with that deal giving the Singapore-based developer a portfolio of 22 industrial facilities in Germany and Austria.
Expanding into Key Logistics Hubs in Europe and Down Under
The Singapore-listed trust will be paying an aggregate cash consideration of A$507.2 million ($355 million) to acquire three warehouses in Australia’s eastern seaboard and another nine facilities in the vicinity of the German cities of Munich, Berlin, Stuttgart, Frankfurt, Dusseldorf, and Cologne.
The acquisition, which adds a total gross lettable area of 297,000 square metres (3.2 million square feet) of high-spec sheds to the trust’s existing portfolio of 2 million square metres of logistics properties in Australia, Germany and the Netherlands, is being made at a purchase price which is adjusted to take into account the aggregate net assets and liabilities of the property holding companies as well as inter-company loans.
Hermes’ Berlin facility, one of the sheds to be acquired by the REIT
The warehouses, which are equipped with cross-docking facilities, photovoltaic solar systems, and in-rack sprinkler systems, are 100 percent freehold, and are fully occupied with a weighted average lease expiry of 8.6 years.
“The New Properties are a strategic fit for FLT, adding more prime, modern, high-quality logistics facilities leased to reputable tenants to the existing portfolio,” said Robert Wallace, chief executive officer of Frasers Logistics and Industrial Asset Management. “The new properties are a strategic fit for FLT, adding more prime, modern, high-quality logistics facilities leased to reputable tenants to the existing portfolio.”
Current tenants include multinational transport logistics firm Hermes, tech company Bosch, US automotive parts supplier Dana, and label manufacturer Avery Dennison.
Diversifying to Reduce Risk
Frasers Logistics and Industrial Asset Management said in its announcement that as Europe’s largest logistics hub, demand for German logistics space was strong, with a record take-up of 7.3 million square metres last year, boosted by the strength of the German economy and its strong foreign trade and industrial production.
Europe has been a major focus for Frasers Property in recent years after the company controlled by Thai billionaire Charoen Sirivadhanabhakdi paid £686 million (then $903 million) to acquire a set of four UK business parks in September 2017.
In July of that year the developer paid €20.5 million (then $23 million) to acquire a 76.5 percent stake in German industrial real estate investment firm Geneba Properties.
According to JLL’s quarterly report on the logistics and industrial market in Germany, 14 percent less space was taken up by owner-occupiers and lettings in the first quarter 2019 compared with the first three months of 2018, but it was still the second-best result of a first quarter in the past ten years.
The REIT manager also said that the Australian logistics market, in particular Sydney, Melbourne and Brisbane, where the three proposed acquisitions are located, was one of the most sought-after sectors by both domestic and global players.
CBRE reported in its quarterly report for the first quarter that logistics and industrial rental growth in Australia was stable with super prime rents increasing 2 percent compared with the last quarter of 2018.
Singapore Loves European and Australian Warehouses
Frasers is one of a growing number of Singapore players acquiring logistics assets in Australia and Europe, following a pair of billion dollar deals last year.
In November last year Singaporean warehouse developer GLP formed a €2 billion ($2.3 billion) venture with Canadian pension fund managers CPPIB and QuadReal to develop modern logistics facilities in Europe.
In the same month, Singapore’s sovereign wealth fund, GIC, announced that it had set up a A$2 billion ($1.44 billion) unlisted trust with Australian REIT, Dexus, to invest in logistics properties down under.
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