LOGISTRIAL Real Estate AG
LOGISTRIAL Real Estate AG: LOGISTRIAL preparing for an IPO
DGAP-News: LOGISTRIAL Real Estate AG
/ Key word(s): IPO
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES, AUSTRALIA, SOUTH AFRICA, CANADA OR JAPAN
LOGISTRIAL preparing for an IPO
Hamburg, September 24, 2019 – LOGISTRIAL Real Estate AG (“LOGISTRIAL” or the “Company”), a company formed to own, manage, and especially lease logistics, industrial and mixed-use properties, is preparing for an initial public offering (“IPO”) in Germany together with the listing of its shares on the regulated market (Prime Standard) of the Frankfurt Stock Exchange. Based in Hamburg, the Company intends to become a leading consolidator in the European logistics real estate market. The Company has secured a highly diversified portfolio of 20 properties with an aggregate size of around 619,500 square meters (excluding open space) and a gross asset value (GAV) of EUR768 million (based on property valuations as of September 23, 2019). The Company considers logistics properties to be a highly sought-after asset class that benefits from a sustained gap in supply and demand driven by strong secular growth trends including the substantial expansion in E-commerce. The proceeds from the IPO are to be used primarily to acquire the aforementioned initial property portfolio. The Germany-anchored secured property portfolio will provide secure income streams as a basis for the planned dividend payments and implementing LOGISTRIAL’s pan-European growth strategy through acquisition of further logistics and, to a lesser degree, industrial and mixed-use assets predominantly in Germany and other European Public Real Estate Association (EPRA)-developed countries. The Company intends to become a German real estate investment trust (“REIT”) by 2020, targeting an approximate 45% loan-to-value (LTV) ratio. To realize its growth strategy, LOGISTRIAL intends to acquire additional properties and further develop the secured portfolio, thereby targeting a GAV of more than EUR2 billion in the medium term. Once qualified as a REIT, the Company plans to distribute an annual dividend equal to the greater of (I) 90% of funds from operations or (II) the minimum distribution required to maintain status as a REIT in Germany, aiming to achieve an annual dividend yield of approximately 5% in the medium term. Opportunities in the growing market for logistics real estate LOGISTRIAL operates in the growing market for logistics real estate in Europe. In addition to strong fundamentals, growing E-commerce in Europe is a main growth driver for LOGISTRIAL’s core market. The share of E-commerce as a percentage of total retail sales in Europe is expected to increase from 9% in 2017 to 20% in 2025 (source: Scope). Therefore, E-commerce retail across Europe is expected to grow at a compound annual growth rate (CAGR) of 10.5% between 2018 and 2023 compared to a CAGR of only 3.3% for physical retail in the same period (source: Euromonitor). Furthermore, on average, online retailers need three times more space than physical retailers, and, as a result, demand for logistics properties is expected to double by 2025 (source: Cushman & Wakefield). Meaningful logistics real estate demand in Europe is expected to outpace supply by nearly 2 to 1 in 2019, resulting in increased rents in major European markets (source: Cushman & Wakefield). With its secured Germany-anchored property portfolio and an additional focus on France, the Netherlands and Austria, LOGISTRIAL has actively sourced its properties in countries serving Europe’s high demand for logistics real estate. Germany, in particular, is experiencing stable demand for logistics real estate due to its central location in Europe, safe-harbor reputation, strong export orientation and large population. E-commerce sales are expected to rise by 10% and make up approximately 3% of Germany’s GDP in 2019 (source: Cushman & Wakefield), while logistics real estate increased from 7.4% of total investment volumes in Germany in 2013 to 10.4% in 2018 (source: Cushman & Wakefield). France, the Netherlands and Austria have also become large and attractive investment markets, with growing E-commerce and a lack of suitably large logistics assets (source: Cushman & Wakefield). In France, investor competition for prime assets is high and E-commerce growth is expected to make up over 3.5% of France’s GDP in 2019 (source: Cushman & Wakefield). In the Netherlands, prime logistics assets located in the outskirts of core cities are increasingly sought after due to high business-to-consumer E-commerce retailing, while vacancy rates decreased from 7.5% in 2013 to 4.7% in 2018 (source: Cushman & Wakefield). The Netherlands’ status as a key transit hub, its prime assets and the low availability of logistics space in key areas is expected to maintain premium pricing for logistics real estate (source: Cushman & Wakefield). Austria also has stable and favorable economic conditions and good transport linkages, with a relatively small number of logistics assets centered around Vienna, Linz and Graz and their surrounding areas, respectively (source: Cushman & Wakefield). Business-to-consumer E-commerce sales volumes have grown steadily at 5-6% per annum in recent years and accounted for 2.1% of Austria’s GDP in 2018 (source: Cushman & Wakefield). Other European markets have experienced a similar increase in E-commerce sales and logistics investment, including Denmark, Belgium, Italy, Poland, the UK, and Luxembourg. These countries could offer opportunities for future growth for LOGISTRIAL. While continental Europe’s fragmented real estate market includes many publicly listed players, most of them focus on the office, residential and retail sectors (source: FTSE EPRA Developed Europe, excluding the UK, Factset as of July 30, 2019). Among EPRA countries in continental Europe, there are only three listed logistics real estate companies (source: FTSE EPRA Developed Europe, excluding the UK, Factset as of July 30, 2019). None of these listed companies have more than 30% exposure in Germany, which from the Company’s perspective creates a unique opportunity for investors to gain future exposure to this market. Secured high-quality property portfolio The Company already secured a portfolio of 20 properties, eight of which are new developments with the vast majority of available space pre-let. These properties, which have an aggregate footprint of approximately 619,500 square meters (excluding open space), represent a stable, attractive and diversified portfolio. The secured property portfolio primarily includes logistics and, to a lesser extent, mixed-use and industrial properties with a clear focus on four key regions: Germany (approximately 360,899 square meters), France, the Netherlands and Austria (together approximately 258,650 square meters in aggregate). To secure the purchase, transfer and management of these properties, the Company entered into a series of portfolio acquisition agreements in August and September 2019 as a part of a framework agreement also covering asset management services. As of September 23, 2019, the initial properties were valued at EUR768 million. They are or will be leased to 52 tenants with an occupancy rate (including certain rent guarantees) of 99% and a weighted average unexpired lease term (WAULT) of approximately 8.8 years. The tenant structure is diversified, with only one tenant contributing more than 10% of the pro forma annualized rental income of the initial property portfolio as of June 30, 2019. For all 20 properties, the Company expects approximate pro forma annualized rental income of approximately EUR39 million of which 78% is to be generated from logistics properties. The initial properties will be transferred to the Company or its subsidiaries partly through asset transfers and partly through share purchases in property holding companies. Growth strategy LOGISTRIAL pursues the following growth strategy: 1. External growth through acquisitions The Company believes that it is well-positioned to acquire additional properties in the future. Its external asset manager, GARBE Industrial Real Estate GmbH (“GIG” or the “Asset Manager”), has a strong track record of identifying potential target properties. With access to the capital markets and the potential to quickly raise funds for the acquisition of further portfolios and single assets, LOGISTRIAL expects to effectively use GIG’s market knowledge to further strengthen its portfolio in the future. It is expected to source potential acquisition opportunities from properties that are either in-market or sold by a third party and only in exceptional cases purchase directly from GIG. The Company intends to grow its portfolio of logistics properties by focusing on areas centered in and around Germany, (initially focusing on Germany, France, the Netherlands and Austria, as well as other nearby EPRA countries). 2. Internal growth through selective development The already secured property portfolio includes assets that offer limited development opportunities. In particular, industrial assets potentially allow additional logistics property development through conversion projects. Experienced management and highly qualified asset manager LOGISTRIAL is managed by Dr. Justus Westerburg. Dr. Westerburg has 16 years of experience in real estate and M&A and as a qualified lawyer and as certified tax consultant. He has extensive knowledge of Corporate Governance in German Stock Corporations and was appointed as Chief Executive Officer (CEO) of LOGISTRIAL in June 2019. He is supported and overseen by the Supervisory Board comprised of six Directors, including Chairman Prof. Dr. Burkhard Schwenker, former CEO and Chairman of the Supervisory Board of Roland Berger, Arwed Fischer, former CFO of Patrizia Immobilien AG, Dr. Tilman Hickl, whose experience includes serving as former Head of Global Real Estate at UBS Real Estate, and Ms Milagros Caiña-Andree, member of the board of BMW AG. The Supervisory Board includes two additional members: Lars Hammerschmidt and Christopher Garbe. Lars Hammerschmidt is Managing Director of GuN Investment GmbH (“GuN”) and Christopher Garbe is manager of GIG. Both Mr. Hammerschmidt and Mr. Garbe are directors of GuN Verwaltungs GmbH, the general partner of GuN Holding GmbH & Co. KG (“GARBE”). According to the Articles of Association of the Company, GuN is entitled to appoint two members. GuN acquired the Company (which had previously been a shelf corporation since its founding in 2016) in April 2019. So far, GuN has invested EUR5 million in the Company through two capital increases to cover expenses associated with the acquisition of the secured properties and the IPO. GuN or an affiliated company will invest a further EUR20 million in LOGISTRIAL shares as part of the IPO. In addition, GARBE is indirectly involved in some property companies via minority interests of approximately EUR30 million. GuN and GIG are part of the GARBE group. Founded in Hamburg in 1965, GARBE is now one of the leading “Mittelstand” businesses operating in the real estate sector in Germany. The German property group focuses on logistics property, residential and commercial developments and property management. GIG has more than 100 employees, serving approximately 250 tenants from offices in eight locations. GARBE has total assets under management of EUR4.6 billion, including industrial assets under management of EUR2.5 billion, and an additional Logistics development pipeline of approximately EUR1.2 billion as of August 31, 2019. While all material decisions, particularly investment or divesture decisions, will remain with the Company, LOGISTRIAL expects that GIG will play an important role in the management of its property portfolio. Under the terms of the asset management agreement, GIG will be LOGISTRIAL’s exclusive asset manager at least until December 31, 2030. The Company pays GIG a fee for services rendered, which it believes is in line with industry standards. From this annually received pre-income tax remuneration, 10% will be re-invested into shares of LOGISTRIAL. GIG has managed all of the completed secured properties prior to the IPO and is familiar with the properties under development. A significant proportion of the portfolio is sold to LOGISTRIAL directly by GIG. With the appointment of GIG as LOGISTRIAL’s Asset Manager, the Company was able to secure its seed portfolio together with a partner for asset management. Overview of the offering and use of proceeds In connection with the IPO, LOGISTRIAL intends to generate gross proceeds of between EUR550 million and EUR605 million in a primary offering. In addition to the EUR5 million GuN, the current sole shareholder, has already invested in the Company, GuN has agreed to place an order for offer shares in the amount of EUR20 million. With this investment, GARBE Groups total investment will be approximately EUR55 million, including an amount of EUR25 million in shares as well as minority interests in some property companies (in which LOGISTRIAL holds a majority stake) with a total volume of around EUR30 million. Following completion of the IPO (including the preferential allocation), the current sole shareholder GuN as expected will hold less than 5% of the Company’s post-IPO share capital. LOGISTRIAL intends to use the proceeds from the offering for the acquisition of the already secured portfolio. The Company is targeting a 45% LTV ratio in the medium term, which it intends to reach by utilizing long-term debt with an average interest rate of under 1.5%. LOGISTRIAL will finance the acquisition of the already secured portfolio with a debt component of approximately between EUR215 million and EUR250 million. The company will, apart from the acquisitions of the initial properties, fund additional acquisitions with further debt until it reaches the LTV target ratio. Deutsche Bank and J.P. Morgan are acting as Joint Global Coordinators and, together with Kempen, as Joint Bookrunners. Sources: Euromonitor data from Passport (Global Market Information Database) on E-Commerce from July 2019. C&W (U.K.) LLP (“Cushman & Wakefield”), “European Strategy & Overview – The Industrial & Logistics Sector”, dated March 2019 (the “Market Study”). FTSE EPRA Developed Europe, excluding the UK, Factset as of July 30, 2019. Scope Ratings, Logistics – A New Hope? How the Rise of E-commerce Impacts Real Estate, dated March 2017. Contact
LOGISTRIAL Real Estate AG LOGISTRIAL Real Estate AG is a company formed to own, manage, and especially lease logistics, mixed-use and industrial properties. Based in Hamburg, Germany, the Company focuses on properties in Germany, France, the Netherlands and Austria as well as other EPRA countries. LOGISTRIAL intends to qualify as a German real estate investment trust (REIT) in the medium term. The Company intends to become a leading consolidator in the European logistics real estate market. The Company has secured an initial portfolio of 20 properties with an aggregate footprint of approximately 619,500 square meters and a gross asset value of EUR768 million (as of September 23, 2019). The Company’s Germany-anchored secured portfolio has long-term lease contracts, expected to ensure secured income streams from rent, and is rented out to blue chip tenants from various industries. The Company’s initial property portfolio primarily includes desirable logistics properties and, to a lesser extent, industrial and mixed-use properties in Germany, France, the Netherlands and Austria. In order to ensure its future growth, LOGISTRIAL is focusing on two strategic pillars: (i) external growth through acquisitions and (ii) internal growth through selective development. Led by independent management and supported by GARBE Industrial Real Estate GmbH, an asset manager with more than 30 years of market-leading logistics real estate management experience, the Company is targeting annual dividend yields of approximately 5% and a gross asset value (GAV) of more than EUR2 billion in the medium term. DISCLAIMER This announcement does not contain or constitute an offer of, or the solicitation of an offer to buy or subscribe for, securities to any person in Australia, South Africa, Canada, Japan, or the United States or in any jurisdiction to whom or in which such offer or solicitation is unlawful. The securities referred to herein may not be offered or sold in the United States absent registration under the U.S. Securities Act of 1933, as amended (the “Securities Act”) or another exemption from, except in a transaction not subject to, the registration requirements of the Securities Act. Subject to certain exceptions, the securities referred to herein may not be offered or sold in Australia, South Africa, Canada or Japan or to, or for the account or benefit of, any national, resident or citizen of Australia, South Africa, Canada or Japan. The offer and sale of the securities referred to herein has not been and will not be registered under the Securities Act or under the applicable securities laws of Australia, South Africa, Canada or Japan. There will be no public offer of the securities in the United States. This publication constitutes neither an offer to sell nor a solicitation to buy securities. A public offer in Germany will be made solely based on a securities prospectus yet to be published. An investment decision regarding the publicly offered securities of the issuer should only be made on the basis of the securities prospectus. The securities prospectus will be published promptly upon approval by the German Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht, BaFin) and will be available free of charge from the issuer at Caffamacherreihe 8, 20355 Hamburg, Germany, or on the issuer’s website, www.logistrial.com. In the United Kingdom, this document is only being distributed to and is only directed at persons who (i) are investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the “Order”), or (ii) are persons falling within Article 49(2)(a) to (d) of the Order (high net worth companies, unincorporated associations, etc.) (all such persons together being referred to as “Relevant Persons”). This document is directed only at Relevant Persons and must not be acted on or relied on by persons who are not Relevant Persons. Any investment or investment activity to which this document relates is available only to Relevant Persons and will be engaged in only with Relevant Persons.
This announcement contains certain forward-looking statements with respect to certain of the Company’s current expectations and projections about future events. These statements, which sometimes use words such as “aim”, “anticipate”, “believe”, “intend”, “plan”, “estimate”, “expect” and words of similar meaning, reflect the beliefs of the Company’s directors and expectations and involve a number of risks, uncertainties and assumptions which could cause actual results and performance to differ materially from any expected future results or performance expressed or implied by the forward-looking statement. Statements contained in this announcement regarding past trends or activities should not be taken as a representation that such trends or activities will continue in the future. The information contained in this announcement is subject to change without notice and, except as required by applicable law, none of the Company or Deutsche Bank, J.P. Morgan or Kempen or any of their respective affiliates or any of their respective representatives assumes any responsibility or obligation to update publicly or review any of the forward-looking statements contained in this announcement. You should not place undue reliance on forward-looking statements, which speak only as of the date of this announcement. No statement in this announcement is or is intended to be a profit forecast or profit estimate or to imply that the earnings of the Company for the current or future financial years will necessarily match or exceed the historical or published earnings of the Company.
24.09.2019 Dissemination of a Corporate News, transmitted by DGAP – a service of EQS Group AG. |
Language: | English |
Company: | LOGISTRIAL Real Estate AG |
Caffamacherreihe 8 | |
20355 Hamburg | |
Germany | |
Phone: | +49 1523 7746442 |
E-mail: | info@logistrial.com |
Internet: | www.logistrial.com |
Listed: | Regulated Market in Frankfurt (Prime Standard) |
EQS News ID: | 878485 |
Notierung vorgesehen / designated to be listed |
End of News | DGAP News Service |