Azora, together with PGIM Real Estate, has launched a new Spanish-focused last-mile logistics Joint Venture PGIM Real Estate Ultima Milla. PGIM Real Estate, on behalf of its European value-add strategy, and Azora, will jointly fund the Joint Venture, while Azora will source, underwrite and manage the portfolio. This Joint Venture will be the first pure-play investment vehicle focused on last-mile logistics assets in Spain which is one of the largest and most attractive European markets for this asset class.
The Joint Venture will be funded with €75m in initial equity commitments, providing a total investment capacity of over €150m, which it expects to deploy over the next 2-3 years. The Joint Venture will seek high-quality last-mile logistics opportunities with strong sustainability credentials which it intends to deliver primarily through value add asset management, high-quality developments and, selectively, the acquisition of stabilised operating assets. The investments will be located in the first ring of Spain’s major cities, with a specific focus on Madrid, Barcelona and Valencia.
The demand for high-quality last-mile logistics in the Spanish market has become even more apparent as COVID-19 has accelerated the already strong structural trends driving the sector. Spain’s historically low e-commerce penetration rate, which, even pre-COVID-19, was expected to grow by 11% per annum, combined with a wider focus on on-shoring and efficient supply chains as a result of the pandemic, is expected to drive increased demand for fit-for-purpose logistics space in the coming years. These factors, combined with a scarcity of high quality, sustainable stock and, in some areas, available land for development, are expected to provide strong tailwinds for the sector into the future.
Cristina Garcia-Peri, Head of Strategy and Business Development at Azora, commented: “Being able to launch Spain’s first pure-play investment vehicle for last-mile logistics assets, alongside such a high-calibre investment partner as PGIM Real Estate, allows us to further extend our substantial and long-standing real estate investment platform. At a time when demand is increasing exponentially, with Spanish e-commerce penetration beginning to catch up with many other European countries, this venture will allow us to harness our expertise in the Spanish market to deliver double-digit returns on behalf of our clients.”
Nabil Mabed, Head of France, Spain and Portugal at PGIM Real Estate, added: “The Spanish last-mile logistics market is hugely undersupplied, and, following the COVID-19 crisis, the importance of on-shoring and supply chain is becoming increasingly important. We look forward to working alongside Azora to leverage these trends to source and deliver attractive opportunities on behalf of our clients.”
