PFA makes billion-DKK investment in large logistics portfolio
PFA has just entered into an agreement with the South Korean pension fund The Public Official Benefit Association, POBA, and a pan-European real estate investment manager on the purchase of a billion-DKK portfolio of logistics properties.
The investments are made in a portfolio of modern logistics properties across Europe. In addition to the South Korean POBA, the pan-European real estate investment manager PATRIZIA holds part of the investment and functions as manager.
PFA's Head of Real Estate Michael Bruhn highlights that this is a large step in the realisation of PFA’s property strategy, which is focused on more investments in suitable projects across Europe and on a general increase in the number of foreign property investments in the years to come.
“With this investment with two recognised partners, we have ensured that the pension savers will benefit from the stability offered by property investments over time while also benefitting from the growth within logistics and e-commerce. International partnerships are very interesting because our joint knowledge and competences provide the best foundation for making such a large investment in an international market,” Michael Bruhn, Head of Real Estate in PFA, says.
He stresses that he looks forward to the cooperation with POBA and PATRIZIA on the investments in the portfolio. PFA invests just above DKK 2,6 billion, which amounts to more than half of the equity in the deal.
“This is a significant investment for PFA in a number of well-situated logistics properties in European key markets, which is a strong supplement to our existing portfolio of properties and business in Denmark, the rest of Europe, Asia and the US,” Michael Bruhn says.
Focus on warehouses and logistics
The portfolio totals 42 logistics properties in some of the most central junctions in Europe, and the investments are placed in the following countries: France (17), the Netherlands (3), Italy (11) and Spain (11).
Logistics properties have become very attractive, especially because of the increase in e-commerce. In Europe, e-commerce has increased by 300 per cent since 2010, and, during the same period, letting of warehouse and logistics properties has increased by 150 per cent.
The investment supports PFA’s focus on selected international megatrends, of which one is e-commerce, which is supported by logistics and infrastructure. This deal is one of PFA's largest international property investments and the largest single investment in logistics PFA has ever made.
The South Korean partner The Public Official Benefit Association is satisfied with the investment. In connection with the signing of the agreement, CEO Kyong Ho Han has stated:
“This agreement with PFA, a preeminent institution of Europe, will not only provide the cornerstone for catapulting POBA into the European market as a major player but also serve as an exemplary model of cooperation between global investors. The co-investment opportunity will enable POBA and PFA to jointly harness the high potential for growth in the European logistics space and mark the advent of an enduring strategic partnership between the two organizations.”
Figures for 2010-2019, the 2019 figures are estimated.
• It is an investment in a portfolio of logistics properties, Mercury, among PFA, the South Korean pension fund The Public Official Benefit Association and the pan-European real estate investment manager PATRIZIA, which also functions as manager and has great experience with this type of investment – including significant local knowledge of the markets in the countries that the investments are made in. PFA invests just above DKK 2,6 billion, which amounts to more than half of the equity in the deal.
• The fund's investments cover a total of 42 logistics properties. Major tenants include Carrefour, Easydis, Geodis, (France), DHL and ALDI (Italy), Logifrio, Mediapost (Spain), Leenbakker (the Netherlands).
• 60 per cent of the portfolio is located in France, where e-commerce is expected to increase a bit more than in the rest of Europe. 17 per cent of the portfolio is located in or around Paris.
• The deal includes 1.4 million square metres in logistics buildings, and an additional 138,000 square metres under construction. The buildings meet the newest specifications for logistics and warehouse buildings.
• In connection with the investment, policies for CSR (Corporate Social Responsibility) and ESG (Environmental, Social and Governance) have been incorporated into the contractual framework. Furthermore, a responsible tax structure has been implemented.
• As interest rates continues to be at a low, property investments become increasingly relevant for long-term investors such as PFA. Property investments form part of PFA’s portfolio of so-called unlisted investments, which has just passed DKK 100 billion and makes up and increasing percentage of PFA's pension assets.