M7 Real Estate has purchased Pallag 43, a last mile logistics asset in the north of Budapest, Hungary from a private investor for €9.6 million.
M7 Real Estate said it had fully deployed the capital raised on behalf of M7 CEREF II, its value-add fund targeting logistics and office investments in key Central European markets with this acquisition.
Pallag 43, which comprises 11,152 sq m of distribution warehouse space, is fully let to Autonet, a multi-national supplier of automotive parts, on two separate leases which are due to expire in 2022 and 2026.
The logistics asset in Budapest is easily sub-divisible, enabling potential future conversion to multi-let. The asset is well placed to benefit from the favourable occupier dynamics in the Hungarian logistics market, with vacancy at record low levels.
M7 CEREF II, which was launched in 2020, will close with a portfolio of nine assets acquired for €91 million, split 40/40/20 across Poland, Hungary and Croatia and split evenly between logistics and office space.
The major Central European economies have continued to grow strongly over recent years, resulting in the expansion of key cities such as Warsaw, Budapest and Zagreb, according to the company. ”This has led to strong market dynamics for well-located office and logistics stock, particularly in central locations with good transport connections.”
David Ebbrell, CEO M7, commented: “We are very pleased to have assembled an attractive portfolio of logistics and office investments across Central Europe with upside potential. Our team on the ground is already underway executing our asset management plans across the portfolio, leveraging our expertise in this area.
“Strong GDP growth and rising e-commerce in Central Europe is fuelling a sharp increase in the demand for logistics space, particularly in last mile locations. Pallag 43 is a high quality asset that is situated in close proximity to Budapest city centre, where an extremely low vacancy level of less than 2% is placing upwards pressure on rental values.”