AustralianSuper and Oxford Properties Group (Oxford) formed a strategic partnership that aims to build a significant industrial and logistics venture across Europe, which will be managed by M7 Real Estate. AustralianSuper has acquired a 50% stake in Oxford’s c. €840m European industrial and logistics portfolio and in M7 Real Estate, the market-leading European investment and asset management business that was acquired by Oxford in 2021.
The joint venture is the first between AustralianSuper and Oxford and brings together two like-minded global institutional investors managing a combined €270b of long-term capital on behalf of over four million pension fund members.
The partnership will provide further capital to fund the growth of the Portfolio, known as the European Supply Chain Income Partnership (ESCIP), with a target of up to €4.5b GAV of high-quality ‘last mile’ and mid-box warehouses over the next three to five years.
The Portfolio currently comprises c. 730,000m2 high-quality urban logistics and distribution warehouses across 76 assets. The properties are well located in 19 of the most strategic urban ‘last mile’ and distribution hubs in the UK, Denmark, France, Germany, the Netherlands and Spain. With a diversified base of more than 200 tenants, the Portfolio is well-positioned to capitalise on increased occupier demand and rental growth throughout Western Europe.
M7 Real Estate, as investment and asset manager, will be tasked to source and execute on new opportunities for the strategy targeting income-led exposure across the pan-European supply chain, with a continued focus on both smaller, multi-tenanted, core+ or value-add assets located near large cities and population centres, alongside a core+ mid-box strategy seeking investments into larger distribution and warehouse assets in key logistics corridors, throughout the six target markets of the venture.
The assets have strong environmental credentials and are focussed in submarkets that are characterised by acute supply-demand tension, with 53% weighting to urban assets by estimated rental value (ERV). In the UK these include London and the South-East (19% of total ERV) and the Midlands (14%), as well as Paris (15%), Copenhagen (11%) and Barcelona (8.2%) in mainland Europe.
The Portfolio is c. 90% occupied and delivers a highly diverse and defensive income stream secured against 214 tenants, across a range of business types and geographies. No single tenant represents more than 5% of the total in-place rent.
Paul Clark, Head of European Real Assets at AustralianSuper, commented: “We believe urban logistics and distribution represents one the most compelling sector opportunities in European real estate today, and have been tracking the sector for several years to find the right portfolio that meets our ambitions, with strong fundamentals and significant growth potential. We are delighted to partner with the Oxford and M7 teams, investors with proven track records operating and growing high-quality logistics portfolios, to scale the ESCIP platform together using our collective expertise, generating long-term performance for members.”
Joanne McNamara, Executive Vice President, Head of Europe at Oxford Properties, commented: “This strategic partnership with AustralianSuper brings a significant and, importantly, a like-minded capital partner alongside us into both the M7 portfolio and the M7 Real Estate platform. This creates full alignment between all three parties from day one while providing fresh capital from both partners to grow the platform as we enter into a new real estate cycle. We believe there are exciting prospects in this high conviction strategy, a major pillar of Oxford’s capital deployment ambitions in the region for 2025, with a compelling pipeline of investment opportunities which we expect to announce in short order.”
David Ebbrell, CEO of M7 Real Estate, commented: “Since its foundation M7 Real Estate has been a go-to partner for some of the world’s largest and most respected real estate investors wishing to access the European multi-let and urban logistics sector. Having been acquired by Oxford Properties in 2021 and enjoyed a very successful partnership over the past four years, we are very excited at the prospect of now working alongside AustralianSuper as well. Not only is AustralianSuper’s investment into our business another huge endorsement of M7 Real Estate’s team, its expertise and long track record of creating value, the support of Australia’s largest superannuation fund also brings with it a commitment to invest significantly through our platform alongside Oxford Properties into the European industrial and logistics sector over the next few years, helping us achieve our own ambitions for growth.”
The transaction is expected to complete at the end of Q1 of 2025 and is conditional, amongst other things, on customary regulatory approvals.
Image source - AustralianSuper.
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