CPA17 – Global Buys 897 KSF H&M DC in Poland

W.P. Carey, a REIT specializing in single-tenant net-lease properties, paid $85 million for an 896,911-square-foot logistics center in Poznan for international retailer H&M Hennes & Mauritz AB.
H&M logistics center, Poznan, Poland

H&M logistics center, Poznan, Poland

W.P. Carey Inc., a REIT specializing in single-tenant net-lease properties, paid $85 million for an 896,911-square-foot logistics center in Poznan, Poland, for international retailer H&M Hennes & Mauritz AB. CPA 17-Global, one of W.P. Carey’s publicly non-traded REIT affiliates, acquired the property from a fund managed by Invesco Real Estate.

The announcement came two days after W.P. Carey said CPA 17-Global had purchased the new European Innovation Center of Royal Friesland Campina in the Netherlands for approximately $41 million from Hurks, a development and construction company which built the facility. RFC is the fourth largest dairy company in Europe and the fifth largest in the world.

The back-to-back purchases mark the fourth European transactions this year, according to Jeffrey Lefleur, W.P. Carey managing director. The REIT has spent approximately $217 million so far this year in Europe, Lefleur said in a news release about the H&M deal.

“We were attracted to the long-term income provided by the lease, the strong guarantee of H&M and the high quality of the property,” Lefleur said of the Poland logistics center.

Tomas Picha, director of transactions in Central Eastern Europe for Invesco, said in the release, “Our closing of this transaction confirms the high level of institutional interest in Polish assets with long-term leases to strong tenants.”

Invesco was represented by Colliers International, which was retained to market the property for sale. Property agent Victorios acted on behalf of CPA 17-Global.

Neil Gregory-Eaves, international director at Colliers International, who led the Invesco team, told PropertyEu Info that this was the largest single-tenant industrial transaction since the global financial crisis and the second largest transaction ever in Poland. He told the website, which is run by PropertyEu BV, a commercial real estate research and publishing company in the Netherlands, the transaction “reflects strong liquidity for long-term let, core properties across Europe at present.”

The logistics center is subject to a long-term, triple-net lease that is fully guaranteed by H&M, the world second-largest retailer. The Poznan center is H&M’s Eastern European distribution center and the primary e-commerce and online-retail logistics hub for Europe.

Despite continuing economic challenges in Central and Eastern Europe, there is still demand for modern logistics and industrial space in Poland, with many companies outsourcing their logistics activities to save money, according to the Q1 2013 Industrial Market Poland report by Jones Lang LaSalle. Logistics operators represented 48 percent of the new demand for industrial space, JLL noted.

In June, Prologis, the global provider and operator of industrial real estate, said it was constructing a 376,000-square-foot, build-to-suit distribution center for a leading Polish retailer at Prologis Park Wroclaw V. It was the third build-to-suit project for Prologis in less than two years at the 173-acre industrial park.

The JLL report notes that the Warsaw suburbs continue to be the largest regional industrial market in Poland with 21.5 million square feet of stock, followed by Upper Silesia with 14.9 million square feet and Poznan with 10.9 million square feet of stock. But the report noted that the vacancy rate went down 3 percent in Poznan between the fourth quarter of 2012 and first quarter of 2013 and it expects it to continue to shrink because of the lack of construction activity in the region. The decreasing vacancy rate, though, resulted in higher rents in Poznan, according to the JLL report.

W.P. Carey, which is celebrating its 40th anniversary, has been active in Europe since 1998. The firm, which also provides long-term sale-leaseback and build-to-suit financing for companies, owns and manages a worldwide investment portfolio worth about $15.2 billion. It has approximately $3.6 billion in European assets.