Abrdn Standard European Logistics Income (ASLI ) has returned to the market with a share issue for the second time in four months after making a ‘milestone’ acquisition in Madrid last month that ate up its cash pile.
The £415m portfolio of European logistics assets is looking to raise funds to cover the cost of its near-term €142m (£118m) pipeline of investment, after swiftly deploying the £125m it raised in September in a portfolio of assets in the Spanish capital.
On Wednesday the 4% dividend yielder said it was looking to place new shares at 110p, a 1.8% discount to their 112p closing price on the previous day and a 4% premium over the real estate investment trust’s last published net asset value per share of 105.8p on 30 September. It estimates the NAV has risen 1.5% since then. Private investors can apply to buy the new shares on the PrimaryBid app.
Evert Castelein, manager of the real estate investment trust, described the December purchase in Madrid as a ‘milestone transition’ and the ‘largest deal I have done’ as he paid €227m for seven buildings and one in development just 15 minutes from the city centre.
‘We have reason to be excited because it is a very large deal, and we have deployed the capital very quickly without cash drag on the portfolio,’ he said.
‘It puts us on the path to a market where we want to be. We want to build exposure in mid-sized big boxes in urban locations.’
The largest tenant in the properties is e-commerce giant Amazon, which is now the biggest occupier across the entire ASLI portfolio and Castelein said he ‘was happy to have them on board because they are the biggest e-commerce player in the world’.
He said that location was key for delivery companies as their biggest cost is not housing stock but transport costs, and being closer to the city centre reduces this – making the new asset a prime location.
The Madrid deal means, however, that the fund is fully invested and Castelein needs more cash in order to see through a deal for a portfolio of three assets in France and another asset in the Netherlands, both of which are going through due diligence.
‘We have funding requirements for the assets in the pipeline and also for the development in Spain,’ he said.
Castelein flagged the track record of the fund whose net asset value (NAV) has grown 8.8% over the past year and 31.4% over three years.
‘This is a story of growth, of sector growth and portfolio growth,’ he said.
While the fund has ‘hit the ground running’ this year, Castelein said: ‘It’s nice to raise capital, but we need to box clever and deploy it in a short period of time.’
With strong tailwinds in e-commerce in Europe – which is behind the UK when it comes to online shopping – and Amazon expanding across the continent, coupled with a lack of available logistics properties, Castelein said there is an ‘acceleration in growth’ coming in the sector.
‘The portfolio has benefited from yield compression but also rental growth,’ he said.
Castelein said growth in the sector has made it more competitive in terms of finding well-priced assets, but he is not raising more money speculatively.
‘We are not going to raise anything without clarity on the pipeline,’ he said. ‘But we find assets quickly and the cash has never been sitting in the fund for long.
‘I am bullish and I like to be aggressive but I also want to take prudent steps at the same time – it’s all a balancing act.’
He added that 2021 was a transformational year for the four-year-old fund, ‘where we accelerated growth with big steps’ and 2022 will be a continuation of the strategy, with the aim of growing the portfolio, which is currently yielding 3.4%.
‘This year we will accelerate again, hopefully to the £1bn mark, which has been my personal ambition,’ he said.
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