European logistics real estate fund sells assets to Blackstone

Singapore

A EUROPEAN logistics real estate fund managed by Elite Partners Capital has completed the sale of its entire portfolio to a fund managed by the Blackstone Group for 520 million euros (S$795 million).

The sale has enabled the closed-ended Elite Logistics Fund I, listed on private exchange ADDX, to achieve an annualised return more than double its 12 per cent per annum target.

Individual accredited investors on ADDX subscribed to the Elite fund in 2 separate offerings in June and December 2020. Fund units were tokenised by ADDX, and the use of blockchain and smart contracts enabled ADDX to reduce the minimum investment size to 20,000 euros, from 1 million euros.

ADDX investors have received 98 per cent of the proceeds from the sale to Blackstone. The remaining funds will be distributed after the fund is formally concluded later this year.

The fund was invested in mature, income-producing logistics warehouses in the UK, Poland, Germany Czech Republic and Spain. Tenants comprised large multinationals including DHL and Pepsi.

Enoch Tan, portfolio director of the Elite Logistics Fund I, said the pandemic has raised demand for space in logistics and e-commerce facilities, as supply chain disruptions prompted companies to increase inventory levels for food and other products, to ensure they could meet demand consistently.

"Our investment approach focused on well-performing logistics real estate in developed European markets. Even prior to the pandemic we were bullish about logistics because of the broader expansion of the e-commerce industry and new demand for space in the UK arising from Brexit.

"This strategy paid off as we acquired assets which were fully tenanted and achieved 100 per cent rent collection throughout the pandemic." In contrast, he said, rent collection for retail and office space fell to under 50 per cent across Europe.

"In the past 2 years, the rate of rental collection became one of the key performance matrices for real estate investments. Because of this, logistics assets were highly sought-after due to their consistently low rates of rental delays and defaults."

Travel restrictions in 2020 were also a challenge to real estate transactions. The fund's strategic partner Macquarie Capital Principal Finance, however, assisted the transactions as it had offices and employees in Europe. Singapore-based members of Elite followed site visits and meetings with tenants via Zoom.

Elite Partners Capital is a Singapore-based alternative asset manager. with over S$1 billion in assets under management. It is the sponsor of Elite Commercial Reit, the first sterling-denominated Reit listed on SGX in 2020.

Tan said that as the fund approached the end of its 2-year mandate, an initial public offer was considered. "We concluded that the private sale to Blackstone yielded the highest returns to investors."

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