First Close of GLP’s European Logistics Fund Yields $1.3B

The global investment manager's second pan-European investment vehicle attracted equity commitments from both new and repeat participants.
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Singapore-based GLP has completed the first close of GLP Europe Income Partners II, its second pan-European income logistics fund, with a great deal of buying power. GLP EIP II secured equity commitments totaling €1.1 billion, or approximately $1.3 billion, from global institutional investor partners, including repeat investors and those new to the fund series.

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The successful first close of GLP EIP II dovetails with the current state of the European logistics investment market. “Investor appetite is not fading as logistics represents a safe, stable and attractive asset,” according to a report on the first half of 2020 by BNP Paribas Real Estate. “Prime yields remained stable in the second quarter and show no sign of decompression.”

GLP EIP II is seeded with a roughly 20 million-square-foot portfolio located in 25 established logistics markets spanning nine countries. The collection of 25 assets, which has an average age of less than five years, has had a banner year so far, with 1 million square feet in leasing activity pushing its occupancy level up to more than 97 percent. The group of properties will only grow as GLP EIP II endeavors to continue acquiring logistics properties in key European markets.

GLP has been making quite a splash with investors despite being a relative novice in the European logistics sector. The global investment manager entered the market in the fall of 2017 with the acquisition of European logistics developer and investor Gazeley and its 17 million-square-foot operational portfolio and 16 million-square-foot development pipeline. In conjunction with the Gazeley acquisition, GLP established two European funds, one of which was GLP Europe Income Partners I, seeded with a $2 billion portfolio of Gazeley assets in the U.K., Germany, France and the Netherlands. GLP EIP I closed in 2018.

All the right fundamentals

The European logistics market is proving quite stable in the face of the global pandemic. Overall leasing activity for warehouses larger than 50,000 square feet in 21 key cities decreased by a mere 3 percent year-over-year in the first half of 2020, according to BNP Paribas research. Activity in cities like Marseille, France, which recorded a staggering 1,300 percent increase in take-up, helped buoy numbers, as did Bristol and Manchester in England, with respective year-over-year increases in take-up of 525 and 127 percent. Conversely, Berlin and metropolitan Paris saw take-up plunge by 64 and 52 percent, respectively.

“Following record volumes of transactions for three years in a row, 2020 will inevitably show a decline in take-up. However, the logistics market showed good resilience during the COVID crisis as market fundamentals remained healthy, with low vacant space and strong demand boosted by e-commerce plus the necessity of providing essential supplies during lockdown,” according to the BNP Paribas report.