The manager of Frasers Logistics & Commercial Trust BUOU (FLCT) has agreed to acquire an 89.9% stake in the equity interests in the property-owning companies which hold four logistics properties located in Germany. The agreed property purchase price for the new properties is EUR129.5 million ($188.9 million) representing a discount of 5.3% and 1.1% to the appraised value by Colliers and CBRE respectively.
A conditional share purchase agreement (SPA) between FLT Europe B.V., a wholly-owned subsidiary of FLCT’s trustee and Frasers Property TQ5 Limited’s (FPL) subsidiaries, Frasers Property Investments (Europe) B.V. and FPE Investments RE11 B.V., were entered into on March 14.
Frasers Property Investments (Europe) or FPIE currently holds a 94.9% stake in three of the four property holding companies while FPE Investments currently holds 94.0% of the stake in the fourth company. FPIE and FPE Investments will continue to hold stakes of 5.0% and 4.1% respectively in the interests in the companies.
The new properties comprise four buildings with a total gross lettable area (GLA) of some 72,422 sqm (779,543.92 sq ft). The properties have a long weighted average lease expiry (WALE) of 6.1 years and will benefit from rent escalation with consumer price index-linked indexation incorporated in its leases, says FLCT.
The buildings are currently fully leased to tenants including multinational corporations such as Schenker AG, DACHSER GmbH & Co. KG and Hermes Germany GmbH, which are existing tenants within FLCT’s portfolio. These companies are also key third-party logistics providers with exposure to the new economy sectors such as e-commerce fulfillment services.
Other tenants also include Posagenda GmbH and TB International GmbH, which are in the logistics, distribution, and consumer and retail product sectors.
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All four properties are located in key logistics markets in Germany with three of them – the Egelsbach Property, the Saarwellingen Property, and the Überherrn Property – located within the “Blue Banana” region. The region stretches across Western and Central Europe – from North West England to the Netherlands, Brussels, Germany, France, Switzerland and Northern Italy. The Hamburg property is situated in proximity to the Port of Hamburg, the largest port in Germany.
According to FLCT, the freight and logistics market in Germany is one of the largest in Europe and remains attractive for its strategic location within the region.
“The German logistics sector has maintained its resilience due to its strong underlying market fundamentals, bolstered by close to record low vacancy rates, slowdown in new developments resulting in limited supply in key logistics hotspots which drove market rents by 12% in 2023,” says the REIT.
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“This transaction allows FLCT to acquire a 100% logistics and industrial (L&I) portfolio in a sector which has demonstrated secular growth and driven by market trends which include the prioritisation of supply chain resilience and the use of technology to improve the efficiency of logistics operations,” says Anthea Lee, CEO of the REIT manager.
“The proposed acquisition is in line with our strategy as we increase the proportion of L&I assets in our portfolio. The proposed acquisition demonstrates FLCT’s ability to tap on our sponsor’s pipeline and this deal size enables the manager to execute the transaction in a timely manner to secure additional income stream from the L&I sector,” she adds.
The new properties are said to increase FLCT’s portfolio occupancy to 95.9% as at Dec 31, 2023 while maintaining full occupancy for its L&I portfolio. It will also maintain the REIT’s portfolio WALE at 4.4 years based on gross rental income (GRI).
The purchase consideration will be funded through external debt financing. The proposed acquisition is expected to be completed by end-March.
Units in FLCT closed flat at $1.04 while shares in FPL also closed flat at 83.5 cents on March 14.
