Dream Industrial wins auction to buy assets in European warehouse fund

London

DREAM Industrial Real Estate Investment Trust has won an auction to buy the assets in a European warehouse fund, the company said in a statement Wednesday, confirming an earlier report by Bloomberg News.

The Canadian Reit will pay 880 million euros (S$1.4 billion) for the portfolio of 31 European warehouses, according to the statement.

The offer was selected by seller Clarion Partners Europe ahead of rival bids ranging from 850 million euros to 900 million euros, people with knowledge of the process said.

The company's ability to execute the deal quickly was a factor in beating out higher offers, said the people, asking not to be identified as the process is private.

"All the assets are well-located in their respective geographies, with easy access to transportation networks and are well-poised for growth in income and value," according to the statement from Dream.

A spokesman for Clarion Partners, which is owned by Franklin Resources, declined to comment.

Europe's warehouse market is red hot as retailers rush for space to service the boom in e-commerce that's accelerated during lockdowns designed to stop the spread of the deadly coronavirus.

Across Europe, companies rented a record 345 million square feet of warehouse space last year, 14 per cent higher than 2019, data compiled by broker Cushman & Wakefield show. That's causing bidding wars for properties as investors bet rents will continue to rise.

Clarion's portfolio had been expected to sell for more than 800 million euros when it was first put on sale in January, according to a report by Property EU. Dream Industrial Real Estate Investment Trust fell as much as 1.6 per cent in early trading on Wednesday.

The portfolio, which includes properties in six countries including France, Germany and the Netherlands, includes plots of land that offer the chance for further development, Dream's statement said. The deal is expected to close in the next 60 days, it said.

Vacancy rates across European warehouses reached a record low 5.3 per cent at the end of 2020, according to research published by Savills. That will support average rental growth for the best big warehouses in Europe of 1.9 per cent per year through 2024, according to a report published by broker CBRE Group. BLOOMBERG