Allianz, VGP Form $1.9B European Logistics JV

Through the new investment vehicle, the partners will focus on premier facilities developed by VGP in Austria, Italy, the Netherlands, Portugal, Romania and Spain.
Salzburg, Austria. Image via Pixabay
Salzburg, Austria. Image via Pixabay

Munich-based Allianz makes a major move to expand its presence in the pan-European industrial market with the formation of a new joint venture. Allianz Real Estate and Antwerp-based logistics properties developer VGP NV have created VGP European Logistics 2, an investment vehicle focusing on core logistics properties. The joint venture will target investments with a gross asset value totaling €1.7 billion, or approximately $1.9 billion, over the next five years

European Logistics 2 will set its sights on logistics facilities in Austria, Italy, the Netherlands, Portugal, Romania and Spain, acquiring only premier assets developed by VGP, which has a sizeable portfolio of land in the target markets. The new or recently developed properties will all be 100 percent leased to blue-chip tenants. Allianz is contributing €350 million, or roughly $395 million, of equity to the 50-50 joint venture. VGP will act as the asset, property and development manager for the joint venture.

Formation of European Logistics 2 follows the launch of its predecessor, VGP European Logistics, by three years. The first investment vehicle pursues logistics assets in Germany, the Czech Republic, Slovakia and Hungary and currently has a gross asset value totaling approximately €1.4 billion, or nearly $1.6 billion.

The European logistics sector continues to thrive, carrying forward the robust momentum seen in 2018. As noted in a report by logistics real estate giant Prologis, on a pan-European basis, net effective logistics rents increased 4.5 percent in 2018, a jump not seen since the emergence of the true pan-European logistics market in 2000. More of the same is on tap for 2019, per the report.

Global growth

Allianz is not just paying a great deal of attention to the pan-European market. The company has been expanding its presence in the U.S., as well, over the last few years. Allianz made a high-profile investment in June 2019, with the $384 million purchase of a 49 percent interest in an approximately 1.5 million-square-foot office condominium at the 90-story 30 Hudson Yards office skyscraper, the second-tallest office building in New York. With the closing of the transaction, New York became Allianz Real Estate’s fifth most significant city in the world in terms of total exposure.