Oxford Properties backs GLP with £200m indirect debut in ‘tightly controlled’ European logistics sector

By James Wallace - Wednesday, May 09, 2018 10:58

Oxford Properties has invested £200m in equity capital into GLP’s European Development Partners I, marking an indirect entry into the “tightly controlled” European logistics market.

The GLP EIP I fund owns a €1.7bn portfolio of Gazeley’s operating assets across the UK, Germany, France and the Netherlands. GLP, the global provider of modern logistics facilities, created the fund after completing the acquisition of Gazeley, the European logistics warehouses and distribution parks developer and investor, last December.

For Oxford Properties, this is a follow-on investment to its participation in the privatisation of GLP, which completed in January. The investment is part of Oxford’s global strategy to increase its exposure to the logistics sector, which is benefitting from global economic growth and a structural shift towards e-commerce.

Online retailers typically require between two and three times the logistics space of traditional brick-and-mortar retailing and with European logistics infrastructure much earlier in its development than the US and Asia, Oxford Properties said now is a particularly attractive time to invest.

Paul Brundage, senior managing director, Europe and Asia Pacific at Oxford, explained the indirect debut into the European logistics sector as reflection of how “tightly controlled market” the sector is which “makes it difficult to build up a direct platform incrementally”.

He added: “Our investment into GLP EDP I provides us day one access to a core development portfolio of scale, managed by one of the best fully integrated logistics teams in Europe. We will be working alongside some of the very best in the market to build new relationships and strengthen existing partnerships, helping to further our long-term objective to build a greater presence in this sector in the UK and Europe.”

The GLP EDP I investment builds on Oxford’s owned and managed 13m square foot logistics portfolio in North America.

In October 2017, GLP announced its entry into Europe by acquiring Gazeley with the stated intention of injecting the €2.4bn portfolio into its fund management platform. GLP’s stated its intention last December to syndicate 85% of the two funds created following the acquisition of Gazeley, GLP Europe Income Partners I and GLP’s European Development Partners I. GLP said demand from institutional investors to partner with GLP in Europe outstrips the amount available for investment. GLP has targeted sovereign wealth funds, pension plans and financial institutions.

“Within the industrial sector, the logistics sector is an alternative that has gone fully mainstream and to which most real estate funds are chronically underweight,” wrote Jefferies in a recent note on property’s hidden bull market."

Mike Prew and Andrew Gill wrote: “Logistics is an area where retailers can make their greatest efficiency gains; it’s a long way from a warehouseman in a brown overcoat and a clipboard. The agile retailer with real-time data is developing a demand-driven supply chain, leading to leaner production processes and cutting surplus inventory. The hidden bull market in Logistics has seen building prices push yields for IPD grade industrial to 4.75% and below retail at 5.70% for the first time due to the long and strong income streams and dearth of supply.”

James Wallace is a freelance consultant and can be reached via Linkedin or email: jawallace32@gmail.com

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