Cromwell Property Group and Korean real estate investment manager, IGIS Asset Management have signed binding agreements to purchase seven DHL logistics assets in Italy for €52.5m, with settlement due in September 2020. Cromwell will fund its share of the acquisition from existing cash reserves. It is intended that the assets will then form the seed portfolio for a new Cromwell European Logistics Fund once launched.
“Logistics is a ‘high conviction’ sector that we believe will prove resilient in these difficult times and provide our capital partners with strong potential for outperformance over the medium term. We are excited by our new capital partnership with IGIS and the opportunity to launch a new European Logistics Fund,” said Cromwell’s Chief Investment Officer, Rob Percy. “The demand for logistics assets is likely to continue to increase, supported by long term structural and demographic trends, especially in urban locations where supply is constrained. This exciting new initiative is another example of our ‘Invest to Manage’ strategy. Our pipeline now consists of a number of exciting opportunities including the new Logistics Fund, Cromwell Polish Retail Fund and also the proposed Stratus Cromwell Data Centres Fund.”
Located in northern Italy, the wealthiest area of the country, near the cities of Milan, Turin, Bologna and Verona, the seven properties are fully let to DHL on long-term leases with an overall portfolio WALT of 16 years. Two of the seven logistics centres are brand new, built to modern and technologically advanced specifications, while the other five properties are fully compliant with DHL’s high standards having been occupied by DHL since their development.
Lorenzo Caroleo, Cromwell’s Head of Italy, said: “We are delighted with these new acquisitions, which increase Cromwell’s exposure to the logistics sector through seven assets with excellent fundamentals, located in the strongest economic regions of Italy. The urban logistics sector in Italy is characterised by a significant supply/demand imbalance and a supply chain that needs upgrading to keep pace with the needs of modern logistics providers. By acquiring this portfolio, fully let to a multi-national business such as DHL, we are able to tap into this opportunity on behalf of Cromwell and our capital partners globally. We look forward to deploying further capital in the sector as further opportunities arise, both in Italy and elsewhere in Europe."
Sei-hyun Kwon, Senior Vice President at IGIS Asset Management, said: “This acquisition is an excellent example of the type of logistics assets we are looking to invest in. We have been observing the rapid growth of E-Commerce and express courier market in Italy for quite some time. Understanding how tough it is nowadays to identify this type of logistics portfolio in strategic locations, we are very fortunate to be able to work with Cromwell who provides us with the sort of on-the-ground asset and investment management expertise that is so important to ensure success as we continue diversifying our exposure to Europe.”