The Cadillac Fairview/Ontario Teachers’ Pension Plan (OTPP) and Boreal IM €3b joint venture (JV) has completed its first transaction in Italy, the purchase of a portfolio that includes four fully-let and long-lease operational warehouses totalling 198,000m2 and two development plots. The assets are primarily located in the Greater Milan region and all within the target market of the north of Italy.
The portfolio was acquired from Blackstone-sponsored closed-end real estate funds managed by Kryalos SGR, and the transaction was carried out in a newly established fund managed on behalf of the JV, also by Kryalos SGR. The expansion into Italy follows acquisitions by the JV in the UK, the Netherlands, France and Spain over the past 18 months.
Two warehouses of c. 57,000m2 are located on a 152,000m2 site in Pioltello, east of Milan, near Linate airport and direct access to a railway line connecting Milan to northern Europe. The two warehouses are fully let to a global contract logistics provider as their Italian headquarters.
Another 55,000m2 warehouse in Villanterio, south of Milan that has strong ESG credentials, including LEED Gold certification, and benefits from a licence allowing the storage of hazardous goods. The asset is fully let to a French multinational leader in the cosmetic industry and serves the national distribution.
The asset in Pozzaglio, between Milan and Bologna near Cremona, is a 29,000m2 well-maintained warehouse originally constructed in 2011. It is fully let to an Italian chocolate manufacturer.
The last warehouse is located in Monticelli, south of Milan. It was constructed in 2008 with a leasable area of 58,000m2. Fully let to an American multinational whitegoods manufacturer, it is currently undergoing approximately €1m of capex works to improve the asset, including installing LEDs throughout.
Two more assets in the portfolio include the 55,000m2 development plot in Monticelli, adjacent to the asset just mentioned as well as a 44,000m2 plot in San Bellino, between Venice and Bologna that includes a further site currently let to a worldwide leading e-commerce company as on-ground truck and car parking, serving their neighbouring multistorey warehouse.
All of the assets and sites benefit from easy access to the main highways, including the A1 which connects northern and southern Italy; the E70 connecting Turin with Venice (Monticelli and Pozzaglio); and the A13 which runs from Padua to Bologna.
Cadillac Fairview, Boreal and Kryalos are dedicated to implementing sustainable practices and ESG initiatives across the portfolio on behalf of the JV. CRREM analyses will be conducted on the assets in addition to the exploration of PV installation. Boreal will also implement energy performance improvements such as LED lighting and pursue BREEAM in-use certification.
The two developments, which will start shortly, will target minimal embodied and operational carbon and BREEAM Excellent certification.
Nikos Koulouras, Partner at Boreal IM, commented: “We are extremely happy to have completed our first acquisition in Italy, especially as the portfolio is very well located, fully let and offers development potential to capture growing demand for logistics space. This portfolio gives us immediate scale in Italy and demonstrates our commitment to finding and creating value through market insight and proactive asset management. Having established the Kryalos SGR JV in Italy, we now look forward to growing the portfolio further.”
Jenny Hammarlund, Executive Vice President, Investments, Cadillac Fairview, said: “The JV has entered the Italian market with conviction, having carried out detailed diligence and we are confident about the potential of the northern Italian logistics market. We are now in five of our six target markets, giving us diversified exposure to outsized returns in the European logistics market. We are very pleased to be continuing to build the portfolio at speed, particularly in this more challenging market.”
Paolo Bottelli, Founder & CEO of Kryalos SGR, commented: “We are glad to include the Boreal-Cadillac Fairview JV among our investors and we look forward to working side by side to implement our joint strategy in the northern Italian logistics market, where we have been a market leader for years. Kryalos’ strategy is to acquire assets with a view to building improvements and increased energy efficiency in order to cater to the evolving demands of occupiers. This transaction proves the value of that approach, and we are committed to continuing to look for further opportunities to do this with the JV.”
Cadillac Fairview, Boreal and Kryalos were advised by Linklaters, JLL and PwC. On the sell side, CBRE, DILS, Gattai, BNP Real Estate Property Management and 5Lex were retained as advisors, while Di Tanno Associati assisted in relation to regulatory and corporate aspects.
