Arlington Securities has announced the launch of its Continental European Logistics Fund. Arlington is part of the Australian listed Macquarie Goodman Group. The fund has equity commitments that will allow the fund to hold a portfolio of prime industrial real estate exceeding €1.2 billion when fully invested.
The Arlington European Logistics Fund will aim to provide long-term stable core property exposure with a total equity return target of greater than 9.5% per annum. It has closed the equity raising at €625 million and will look to grow considerably in the next few years as more property is acquired. The long-term gearing target is 50%.
Investors globally are increasingly attracted to European logistics due to the long-term return prospects for the sector. The European logistics industry has boomed on the back of expansion of transport routes to and from China and the Middle East. The continuing trend towards outsourcing is expected to continue to drive the need for good quality distribution networks and therefore the demand for warehouses and other logistics property near good trade routes such as ports and airports.
The Arlington European Logistics Fund has attracted institutional investors from Europe, the Middle East and Australia reflecting the current demand from investors globally in European property.
Peter Davies, Fund Director of the Arlington European Logistics Fund, comments: "This is an ideal time to launch a European logistics fund as the prospects for the sector are very strong. Institutional investors from across the globe are looking to invest in an asset and location which they believe is ideally placed to benefit from the increasingly globalised economy. The long term nature of the asset also makes it ideal for institutional investors looking to diversify away from bonds while achieving higher returns.
"We are delighted with the response from investors to the launch of this Fund which has equity commitments of 625m, but we see this as only being the start. Having first refusal on Macquarie Goodman's logistics development pipeline throughout continental Europe gives the Fund a significant advantage in a market where demand for good properties is exceptionally high. We anticipate that the size of the Fund will eventually exceed €3 billion."
Gregory Goodman, Chief Executive Officer of Macquarie Goodman and Chairman of the Fund, said: "The establishment of this Fund represents a major initiative for the Group, highlighting the strengths of the Group's strategy and in particular the advancement of the European platform."
About the Arlington European Logistics Fund
Investors have committed total equity of €625 million of which 24% is to be contributed initially. The balance will be called by the Fund over a period of up to three years to fund further acquisition opportunities.
Macquarie Goodman will initially invest approximately 40% and is targeting a holding range of 20% to 30% over the long term.
The Fund's initial portfolio consists of 12 logistics properties located throughout Continental Europe's major logistics markets. This property was supplied through Eurinpro, a leading developer of tailor made logistics property which was acquired by Macquarie Goodman in May 2006. The Fund will have first refusal over Macquarie Goodman's logistics development pipeline throughout Continental Europe.
The initial portfolio average lease expiry is 6.8 years and average building age is 1.1 years. The portfolio is currently 100% occupied.
The Fund is structured as a Luxembourg Fonds Commun de Placement (FCP) and has a perpetual life fund structure with a liquidity review every 10 years.