Savills IM launches European Logistics Fund 3
Savills Investment Management (Savills IM), ab international real estate investment manager, has launched the European Logistics Fund 3 (ELF 3), which will focus on investments in high-quality distribution centres and cross-docks that can be used by third parties in Europe's core liquid logistics markets.
The fund, which has a target investment volume of at least EUR 600 million and a maximum debt ratio of 50 per cent, has already received capital commitments of EUR 122 million from two German institutional investors at first close. It aims to deliver an annual income of at least 5 per cent through a core/core-plus strategy.
ELF 2, the fund’s predecessor, was closed to new investors at the beginning of 2019 after raising EUR 560 million, which was more than twice its target of EUR 250 million. ELF 2 has delivered a total return of around 7.9 per cent per annum since launch in July 2015 through investments in 22 logistics assets totaling EUR 645 million in six countries.
Savills IM has purchased eight assets on behalf of ELF 2 since the beginning of 2019, and a purchase agreement has been signed for a logistics complex under construction in the Nuremberg metropolitan region. This will be transferred to the portfolio after completion in Spring 2020. Together with other properties that are currently being reviewed for acquisition, the fund will grow to a volume of almost EUR 900 million.
Daniel Hohenthanner, Director of Investment at Savills IM, says: “The fundamentals in Europe’s logistics sector remain buoyant. E-commerce is currently forecast to grow by EUR 220 billion by 2022. This is reflected in continued strong demand for logistics properties and a very low vacancy rate leading to rising rents.
“We have specialist teams in local markets, giving them rapid access to properties coming onto the market as well as off-market transactions. Through ELF 2 we have proven our expertise in deal-sourcing and bringing transactions to a successful conclusion quickly. As a result, a property pipeline for ELF 3 is already built.”
Rena Knöpke, Head of Business Development for Germany, Austria and Switzerland at Savills IM, adds: “The overwhelming response by investors to ELF 2 has helped to make it one of Savills IM’s flagship funds. The strategy has convinced investors.
“Due to continuing high demand, we are pleased to offer another pan-European logistics strategy for institutional investors.”
ELF 3 is an open special alternative investment fund (Spezial-AIF) aimed at international institutional investors. The strategy focuses on multi-use Grade A distribution centres and cross-dock facilities in liquid European core logistics markets in Western European, such as France, Germany and Benelux, supplemented by the UK, Southern Europe, Poland and the Nordics.
The strategy provides for the selective acquisition of properties with asset management potential. In addition to geographical distribution, it also aims for diversification regarding occupier segments (i.e., industry, trade and service providers).