Wednesday, May 20, 2020

Real Estate Group Targets European Last Mile Urban Logistics Outfits

Property Platform Aims at e-Commerce Market
Shipping News Feature

EUROPE – Real estate specialist Meyer Bergman has ambitious plans to create a tranche of property it values at £2 billion available as a pan-European, last-mile logistics platform targeting single tenant assets, calling the platform project Crossbay.

As we have pointed out many times the industrial real estate sector has been growing in popularity in the past few years, particularly as demand for strategically situated ‘last-mile’ delivery hubs has grown so much, with retailers adopting omni-channel formats and consumers increasingly switching to on-line shopping and demanding short delivery times.

Meyer Bergman is looking to exploit the difficulty companies encounter finding suitable, centrally located space as increasingly planning departments look to fulfil government housing aspirations, at the cost of urban warehouse properties. It says its last-mile logistics strategy is more insulated from GDP movements with potentially more goods likely to be distributed in this way post Covid-19. Also occupiers are forced to take long leases and pay a premium for the best locations because speedy access to customers gives them a competitive advantage

While being a separate platform, Crossbay is an extension of Meyer Bergman’s urban mixed-use strategy which has managed more than €8 billion of assets across Europe. The company identifies value-add opportunities in core European locations, repurposing and repositioning assets to increase value. Marcus Meijer, chief executive of Meyer Bergman, comments:

“Demand from e-commerce, online grocery shopping and third-party logistics businesses has soared in recent years. This is a structural shift. Conviction investors rightly see a return premium given the lower level of risk in this property type coupled with continued growth in occupier demand.

“We are creating a long-term institutional platform that will work in parallel to our traditional value-add strategy. For the first time, pension funds will be able to access high quality assets, with grade A occupiers managed by an institutional-grade operator.

“Although we began our last-mile journey in 2018, Covid-19 has highlighted how integral urban logistics are to all aspects of life. As companies look to reassess their supply chains, we will see significantly enhanced investment targeting this area.”

Including near-term pipeline, Crossbay already has over €500 million in assets under management, with properties in Italy, France, Germany, Spain, Belgium and the Netherlands. The portfolio enjoys an occupancy rate in excess of 97% and weighted average lease break of five years, with tenants being a mix of 3PLs (such as FedEx and DHL) and e-commerce brands (including Amazon).

Having recently secured assets in France and the Netherlands, Meyer Bergman is also targeting gateway cities in Southern Europe south such as Milan, Rome, Madrid and Barcelona. E-commerce penetration in Italy and Spain has lagged behind the UK and Northern Europe. The group is also identifying opportunities in the Nordics and around London, where supply has been extremely restricted. Crossbay is on course to double its assets under management portfolio to €1 billion over the next 12 months.

Headed by Marco Riva, who led more than €2 billion of deals while at Logicor (Blackstone’s big box warehouse business), Meyer Bergman claims Crossbay is the first pan-European real estate platform targeting single tenant assets in gateway cities. Marco Riva, head of logistics at Meyer Bergman, observed:

“More than ever, retailers need to be close to their customers, so that is why tenants are willing to sign up to longer leases and pay competitive rents for well-located space. Last mile deliveries make up a significant proportion of retailers’ costs, and every mile and every minute’s delivery time creates expense.

“Online shopping will grow substantially across Europe, including in southern European markets such as Italy and Spain where e-commerce penetration has traditionally been lower. In addition, the just-in-time inventory models that failed to adequately supply consumers and governments during the Covid-19 pandemic will also be re-evaluated. This will all lead to a substantial growth in demand as Europe structurally realigns its retail and supply chain networks.”

Photo: Marco Riva.