MARK, a leading independent pan-European real estate investment manager, is to expand its urban logistics platform Crossbay with a second investment vehicle targeting over €2bn in Gross Asset Value.
The platform is a wholly owned subsidiary with its own corporate structure, led by Marco Riva, previously of Blackstone’s logistics business Logicor, who oversees a 40-strong team spread across seven offices in Europe.
Crossbay’s second vehicle will acquire existing single-user last-mile facilities in major European gateway cities, focusing on assets in urban infill locations where rental growth is expected to be strongest.
Crossbay II will fund initial acquisitions through a €250m pan-European debt facility from global investment bank Citi, which had previously provided €500m in debt financing for the first Crossbay vehicle.
As part of the expansion strategy, Crossbay II will enter new geographies such as Denmark, Sweden and the UK. To maximise value creation, Crossbay II will have a greater focus on asset management and leasing initiatives to drive rental growth, which is accelerating as demand continues to far outstrip supply. In prime locations marked by severe undersupply, Crossbay II will also seek to develop high quality assets, with a strong emphasis on sustainability.
Today’s announcement follows the successful sale of Crossbay’s first portfolio to Prologis for close to €1.6bn, representing a stabilised exit yield of just under 4.25%. The transaction, which closed in September despite the challenging macroeconomic environment, is the largest European warehouse portfolio sale to complete this year.
Crossbay’s first fund secured €550m in equity commitments from a global mix of institutional investors, with the portfolio sale to Prologis exceeding expected returns.
Marcus Meijer, CEO at MARK, said: “Urban logistics remains an attractive investment opportunity thanks to compelling demand/supply dynamics and clear long-term growth drivers, from the shift away from physical retail to online shopping to the reordering of supply chains in the wake of Covid-19 and recent geopolitical events.
“In many European markets, e-commerce penetration continues to lag behind the US, and we expect online sales to rise as a proportion of overall retail spending, while the predominance of inflation-linked leases in Europe means we are well positioned to weather the current higher inflationary environment.
“The urban logistics sector’s strong underlying fundamentals combined with the price dislocation we are seeing presents a unique buying opportunity, while ultra-low vacancy rates provide clear room for rental growth. Rents make up a tiny fraction of corporate occupiers’ supply chain costs compared to transportation. In an environment of high energy and fuel costs, this will increasingly incentivise occupiers to invest in well-located logistics assets close to population centres.
“Crossbay forms a key part of our multi-platform strategy and the platform’s unique structure and genuine pan-European network means we are well positioned to take advantage of repricing to quickly and competitively amass another institutional-grade portfolio of scale.”
Marco Riva, CEO of Crossbay and head of logistics at MARK, said: “Having acquired our first last-mile assets in 2018, Crossbay benefited enormously from an early mover advantage, which enabled us to create a market-leading pure-play urban logistics portfolio that attracted the attention of the world’s largest logistics owner and operator.
“To this day, Crossbay is still Europe’s only truly pan-European pure play logistics platform and there are huge advantages that come with this.
“The second Crossbay vehicle will build on the success of the first by leveraging our teams on the ground to execute more value-add and leasing initiatives to drive value and capture rental growth, and increasing development activity where appropriate, with all new developments built to meet our strict ESG requirements.
“The new facility provided by Citi, following the strong relationship we established through the first Crossbay vehicle, will reinforce Crossbay’s market reputation for speed and certainty of execution.
“We have a solid pipeline of opportunity, but will deploy capital selectively, focusing exclusively on attractively priced assets at very healthy premiums to prime yields that we are able to access off-market through our embedded local teams.”