AEW Finances Pan-European Logistics Deal
The AEW debt platform invested a €30mn ticket in a €473.4m debt facility backed by 40 logistics warehouses across six countries in Europe.
The pan-European logistics portfolio is spread across six different countries - Spain, France, Netherlands, Belgium, Germany and Poland. The facility, jointly arranged by Citibank of the US and Aareal Bank of Germany, provides a five-year financing facility to Investec, with a Loan To Value (LTV) at c. 60% for a margin over 200bps.
“The loan to value is relatively low at below 60% and the quality of the assets is high,” says Cyril Hoyaux, Head of the AEW real estate debt platform. “Most of the assets are qualified as grade A, meaning the buildings have the latest technical specifications for modern logistics assets,” Hoyaux adds. Modern logistics hubs have high ceilings, a large number of docks and doors, connectivity, and locations that facilitates fast transport. Most of the assets in the transaction have excellent road access to main cities. “For instance in France, the assets are located on the critical north to south axis between Lille and Marseille,” says Hoyaux.
The hubs all have high occupancy rates and good diversification of tenants so cash flows are not dependent on a small number of tenants. The tenants include the main logistics players in Europe, such as DHL and Kuehne+Nagel. The deal offers potential for rent upside too with logistics market booming in Europe thanks to the “Amazon effect”.
The transaction has strong covenants, with a full security package. “Senior secured debt, backed by high-quality real estate and sound documentation, should maintain the cash flows investors need, as well as ensure full repayment of capital”, says Hoyaux.
“Overall this asset class is very resilient in the current situation,” adds Hoyaux. “Covid has actually increased margins and lowered risk.
Few senior debt funds are able to source and execute complex pan-European transactions. The Debt platform relies on AEW’s large network of ten offices with local specialists across Europe. “Structuring this kind of deal is complex, and not many firms have the capabilities to do it,” says Hoyaux. The complexity of such transactions enhances the return.
The ability to execute a large deal in the teeth of a pandemic is an indicator of the robustness of the AEW platform. The strategy focuses solely on senior secured debt, which outranks other types of debt in real estate structures.
“It’s no secret why investors like the strategy,” says Hoyaux. “By investing in senior secured real estate loans, investors have visibility over the cash flows.”
For further reading:
AEW SA
An affiliate of Natixis Investment Managers
Privately-held French "Société anonyme à conseil d’administration".
Real-estate investment manager under n°T 8324 delivered by the Prefecture de police de Paris.
Share capital: €17,025,900
RCS Paris: B 409 039 914
22 rue du Docteur Lancereaux 75008 Paris, France
www.aew.com
AEW Sarl
Management company of AIF authorized by the CSSF since 9 January 2015
RCS B0090603
5 Allée Scheffer L. 2520 Luxembourg
Natixis Investment Managers
RCS Paris 453 952 681
Share Capital: €178 251 690
43 avenue Pierre Mendès France
75013 Paris
www.im.natixis.com
This communication is for information only and is intended for investment service providers or other Professional Clients. The analyses and opinions referenced herein represent the subjective views of the author as referenced unless stated otherwise and are subject to change. There can be no guarantee that developments will transpire as may be forecasted in this material.
The pan-European logistics portfolio is spread across six different countries - Spain, France, Netherlands, Belgium, Germany and Poland. The facility, jointly arranged by Citibank of the US and Aareal Bank of Germany, provides a five-year financing facility to Investec, with a Loan To Value (LTV) at c. 60% for a margin over 200bps.
“The loan to value is relatively low at below 60% and the quality of the assets is high,” says Cyril Hoyaux, Head of the AEW real estate debt platform. “Most of the assets are qualified as grade A, meaning the buildings have the latest technical specifications for modern logistics assets,” Hoyaux adds. Modern logistics hubs have high ceilings, a large number of docks and doors, connectivity, and locations that facilitates fast transport. Most of the assets in the transaction have excellent road access to main cities. “For instance in France, the assets are located on the critical north to south axis between Lille and Marseille,” says Hoyaux.
The hubs all have high occupancy rates and good diversification of tenants so cash flows are not dependent on a small number of tenants. The tenants include the main logistics players in Europe, such as DHL and Kuehne+Nagel. The deal offers potential for rent upside too with logistics market booming in Europe thanks to the “Amazon effect”.
The transaction has strong covenants, with a full security package. “Senior secured debt, backed by high-quality real estate and sound documentation, should maintain the cash flows investors need, as well as ensure full repayment of capital”, says Hoyaux.
“Overall this asset class is very resilient in the current situation,” adds Hoyaux. “Covid has actually increased margins and lowered risk.
Few senior debt funds are able to source and execute complex pan-European transactions. The Debt platform relies on AEW’s large network of ten offices with local specialists across Europe. “Structuring this kind of deal is complex, and not many firms have the capabilities to do it,” says Hoyaux. The complexity of such transactions enhances the return.
The ability to execute a large deal in the teeth of a pandemic is an indicator of the robustness of the AEW platform. The strategy focuses solely on senior secured debt, which outranks other types of debt in real estate structures.
“It’s no secret why investors like the strategy,” says Hoyaux. “By investing in senior secured real estate loans, investors have visibility over the cash flows.”
For further reading:
- AEW consolidates real estate debt platform ahead of planned growth
- AEW and Natixis IM in Refinancing of Iconic ENI Headquarters
- Real Estate Debt Helps Investors Ride out Crisis
- AEW/Ostrum AM Invest €64m in German Residential Property
- Covid-19: What is the impact on Commercial Real Estate Debt in Europe?
- AEW and Ostrum Asset Management complete final investments in Senior European Loan Fund II (SELF II)
- Bricks, Mortar and Loans
- Real Estate Debt is the Real Deal
An affiliate of Natixis Investment Managers
Privately-held French "Société anonyme à conseil d’administration".
Real-estate investment manager under n°T 8324 delivered by the Prefecture de police de Paris.
Share capital: €17,025,900
RCS Paris: B 409 039 914
22 rue du Docteur Lancereaux 75008 Paris, France
www.aew.com
AEW Sarl
Management company of AIF authorized by the CSSF since 9 January 2015
RCS B0090603
5 Allée Scheffer L. 2520 Luxembourg
Natixis Investment Managers
RCS Paris 453 952 681
Share Capital: €178 251 690
43 avenue Pierre Mendès France
75013 Paris
www.im.natixis.com
This communication is for information only and is intended for investment service providers or other Professional Clients. The analyses and opinions referenced herein represent the subjective views of the author as referenced unless stated otherwise and are subject to change. There can be no guarantee that developments will transpire as may be forecasted in this material.