AXA IM Alts has acquired a portfolio of logistics assets spread across Norway, Sweden, Denmark and Finland from Nordic real estate investor NREP.
The purchase price was not disclosed. Logicenters, NREP’s logistics platform, will continue to operate the facilities.
The 515,000 sqm portfolio comprises a combination of predominantly modern Grade-A last-mile and regional logistics warehouses, which are almost fully occupied with an attractive average lease length in excess of seven years. 16 of the properties are located within the Nordic logistics triangle, which has population of 15 million people and benefits from strong arterial and infrastructure connectivity.
The majority of the portfolio by value (57%) is located in Sweden, the Nordic region’s most advanced logistics market, with all of these properties EPC A or B rated. The remainder is split between Norway (19%), Denmark (13%) and Finland (11%) and offers significant scope for ESG enhancements, including improved EPC ratings and the installation of solar panels, in line with AXA IM Alts commitment to seeking to affect positive changes in society through its investments.
The portfolio totals 33 occupiers across a diverse range of sectors, including manufacturing, automotive, clothing and e-commerce. 70% of the portfolio is occupied by a mix of domestic and global high-quality sole tenants, with the majority of these properties serving as the tenant’s key regional hub. The remainder comprises multi-let units, which offer flexible areas to suit a variety of potential occupiers and provide longer-term asset management opportunities through both minor refurbishment and lease events.
The Nordic region is one of the fastest growing e-commerce markets in Europe, with e-commerce penetration expected to reach 25% by 2024, up from 12% in 2019, said AXA IM Alts in a press release.
A scarcity of land, increasing construction costs and supply chain shortages are constricting the pipeline of future stock coming through, underpinning strong rental growth, according to the company.
John O’Driscoll, Global CIO, Head of Investment, AXA IM Alts, commented: “This is a rare opportunity to acquire a high quality and large portfolio in one of Europe’s fastest growing logistics markets where we have an increasing conviction. With its mix of single let, tenant critical assets and multi-let, flexible properties, it offers an attractive mix of day one income and longer-term capital appreciation through an active leasing and refurbishment strategy. The Nordic logistics sector is now the third largest in Europe, with new warehouse supply failing to keep up with rapid e-commerce penetration. The European logistics real estate market more broadly has been one of the stand-out performers over the past 18 months, underpinned by demographic and technological trends which have accelerated as a result of the pandemic, with the current global supply chain issues and the inflationary backdrop increasing its appeal.”
Matthias Kettelhoit, CEO of NREP’s logistics platform Logicenters, added: “Having amassed this portfolio over a number of years, this transaction is a natural next step and will allow us to explore new opportunities in the logistics sector. We look forward to leveraging our local experience, strong sustainability ethos and deep customer knowledge as we continue to operate and improve these assets alongside AXA IM Alts, who share our desire to drive the ESG agenda forward.”