Prologis agrees to purchase Colonial’s logistics portfolio

Photo of Gustavo Cardozo senior vice president of Prologis Iberia.

Spanish REIT, Colonial, has agreed to sell to Prologis its logistics portfolio which has a GLA of c. 471,500m² and is comprised of 13 assets in Madrid, 2 in Catalonia and 1 in Seville. According to market sources, the portfolio is over 80% let at either market rent or under rented thus offering an attractive reversionary potential. The credit worthiness of the tenants will also be a boon to investors as it includes companies such as Alcampo (Auchan Group), Carrefour and Kellogg’s. As a result, it is expected to trade at a yield of 5.5% to 5% which would value the portfolio at up to €430 million.

Spain is enjoying a logistic property boom and has attracted over €530 million during the first semester of 2019 according to Knight Frank’s Q2 logistic snapshot.

Spain’s prime net initial yield has fallen to 5% in Q2 of 2019 in line with markets like Dublin and Brussels on the back of strong take up, rapid growth of e-commerce business and occupier demand. The first half of 2019 has seen various transactions by funds like Gramercy, GreenOak and DWS.

Over the next decade, Spain is expected to emerge as one of Europe’s most important logistic corridors, known in the sector as «logistic bananas» and this is aided by the availability of skilled and lower cost labour which has already attracted international manufacturers, including German automobile groups. Various Spanish cities are also located on the TEN-T Atlantic corridor and expected to benefit from traffic between Germany, Benelux and France over the next 5 years.

Plan of the European Ten-T Atlantic Corridor

The development of new high-quality logistics platforms is driving the arrival of new operators demanding built to suit solutions and, according to Knight Frank, Spain’s logistics offer is bound to reach approximately 1,500,000 m². In fact, during the end of February, ICC and DWS inaugurated a new 15,700m² logistics center in Madrid’s Torrejón de Ardoz following a €12 million investment. According to Daniel Galvez, Head of Real Estate at DWS in Spain, “the logistics sector continues to be a segment with a relevant investment focus for the funds [DWS] manages”.