Aberdeen Standard European Logistics Income PLC (ASLI) has acquired a portfolio of newly constructed last-mile logistics warehouses located in the first ring of Madrid, Spain for €227 million, representing a net initial yield of 3.4%.
The 122,000 sqm portfolio consists of four phases with Phases I-III comprising seven newly constructed logistics warehouses and Phase IV comprising one in-development, logistics warehouse with accompanying multi-level delivery van parking station. Phases I-III were acquired on 10 December 2021 with Phase IV due for completion in Q2 2022
The portfolio is let to five tenants, with Amazon Europe accounting for 43% of the total portfolio rental income. Global food retailer Carrefour, UK electric delivery vehicle maker Arrival and Spanish companies Talentum and MCR comprise the remaining Portfolio tenants. On completion of Phase IV, Amazon is expected to become ASLI’s largest tenant by rental income.
ASLI said all leases are upward only, annual inflation linked, with strong rental growth potential. Attractive unexpired lease term of 14.8 years to expiry and 8.7 years to break.
The properties is located in the first ring of Madrid, in Gavilanes, one of the leading last-mile logistics hubs in Madrid and the wider Spanish market. Almost 6 million people are accessible within a 30-minute drive time.
Phases I and II are certified LEED Silver, Phase III is certified LEED Gold and a certification of BREEAM Very Good is expected for Phase IV, further enhancing the Company’s sector leading sustainability credentials.
Tony Roper, Chairman of ASLI, commented: “Raising equity in September was a significant milestone for the Company and reflected our strong conviction in the Continental European logistics proposition. Having stated an ambition to scale the Company, this substantial acquisition enables us to invest the equity proceeds within three months and provide shareholders with further exposure to high-quality, well-located logistics assets with inflation protected income. The Investment Manager’s scale and local presence continues to provide the Company with a strong source of investment opportunities and we are excited for the future prospects of the Company.”
Evert Castelein, Investment Manager for ASLI, added: “This is an extremely rare opportunity to acquire a portfolio of truly last-mile warehouses, leased to investment grade counterparties, in one of Europe’s nascent but fastest growing e-commerce markets. Furthermore, the scale, specification and market leading environmental credentials increase its uniqueness as an investment proposition.
”This acquisition further increases the weighting of the Company’s assets to last-mile logistics, where a number of drivers are forecast to provide strong future rental income growth. Despite recent growth, Continental Europe remains materially behind the UK in terms of e-commerce sales penetration and we believe this provides a compelling backdrop for further strong performance.
“Our Madrid-based transaction team played a crucial role in securing this transaction and completing the required due diligence over a short timescale. This acquisition has once again highlighted the importance of having local teams with strong relationships and a deep understanding of the key local market drivers. The abrdn European logistics platform continues to grow and we are confident this will provide further near-term attractive investment opportunities.”
