CBRE Realty Trust Forms $1.1B European Industrial Property JV with Australian Partner

Per the agreement, CB Richard Ellis will own an 80 percent interest in both co-investment vehicles, while Goodman will own the remaining 20 percent stake.

June 15, 2010
By Barbra Murray, Contributing Editor

Princeton, N.J.-based CB Richard Ellis Realty Trust has formed a joint venture with Sydney, Australia-headquartered Goodman Group to invest an aggregate $1.1 billion on pre-committed logistics-focused warehouse and distribution properties in various European locales. The transactions will be made via two co-investment vehicles.

Per the agreement, CB Richard Ellis will own an 80 percent interest in both co-investment vehicles, while Goodman will own the remaining 20 percent stake. The partners’ U.K. Co-Investment Vehicle will focus on high-quality industrial properties in the U.K., with a goal of shelling out approximately $597 million over a three-year period. Approximately $43.4 million of the funds allotted for the U.K. Co-Investment Vehicle will be spent on the joint venture’s acquisition of two fully leased warehouse/distribution properties owned by Goodman. The assets include Amber Park, a 208,400-square-foot facility in South Normanton, and the 186,600-foot Brackmills in Northhampton. Additionally, the investment vehicle will have a right of first refusal over logistics properties Goodman develops in the U.K.

The joint venture’s other investment instrument, the European Co-Investment Vehicle, will target $493 million in premier property acquisitions in Belgium, France, Germany, Luxembourg and the Netherlands over three years. Three fully leased Goodman properties located in Germany have been designated for purchase by the European Co-Investment Vehicle. Those properties will be bought for a sum of approximately $53.2 million and include a 391,500-square-foot facility in Düren; a 443,200-square-foot facility in Shönberg; and Langenbach, a 225,100-square-foot development scheduled for completion in Munich during the third quarter. The arrangement also gives the European Co-Investment Vehicle the right of second refusal over Goodman development projects in Europe.

Goodman will be responsible for asset management, development and property services for the joint venture. “The Co-Investment Vehicles with Goodman provide us an outstanding opportunity to partner with a leading global logistics development organization that is well-established in both the U.K. and European markets,” Jack Cuneo, President and CEO of CBRE Realty Trust, said in a press release. “This relationship will enable us to further diversify our investment portfolio.”

If there is such a thing as a safe bet in commercial real estate, investing in the logistics/industrial sector may be about as close as it gets. “As rental movements tend to be less volatile, the sector is often perceived as offering more stable income returns than office or retail properties,” real estate services firm Knight Frank noted in a recent report. “Though rapid rental growth is unlikely, so too are severe falls in rental values. Thus, industrial properties can provide relatively secure, stable income and may be good defensive investments through times of market downturn.”