Allianz, VGP Form $1.9B European Logistics JV

Salzburg, Austria. Image via Pixabay

Munich-based Allianz makes a major move to expand its presence in the pan-European industrial market with the formation of a new joint venture. Allianz Real Estate and Antwerp-based logistics properties developer VGP NV have created VGP European Logistics 2, an investment vehicle focusing on core logistics properties. The joint venture will target investments with a gross asset value totaling €1.7 billion, or approximately $1.9 billion, over the next five years

European Logistics 2 will set its sights on logistics facilities in Austria, Italy, the Netherlands, Portugal, Romania and Spain, acquiring only premier assets developed by VGP, which has a sizeable portfolio of land in the target markets. The new or recently developed properties will all be 100 percent leased to blue-chip tenants. Allianz is contributing €350 million, or roughly $395 million, of equity to the 50-50 joint venture. VGP will act as the asset, property and development manager for the joint venture.

Formation of European Logistics 2 follows the launch of its predecessor, VGP European Logistics, by three years. The first investment vehicle pursues logistics assets in Germany, the Czech Republic, Slovakia and Hungary and currently has a gross asset value totaling approximately €1.4 billion, or nearly $1.6 billion.

The European logistics sector continues to thrive, carrying forward the robust momentum seen in 2018. As noted in a report by logistics real estate giant Prologis, on a pan-European basis, net effective logistics rents increased 4.5 percent in 2018, a jump not seen since the emergence of the true pan-European logistics market in 2000. More of the same is on tap for 2019, per the report.

Global growth

Allianz is not just paying a great deal of attention to the pan-European market. The company has been expanding its presence in the U.S., as well, over the last few years. Allianz made a high-profile investment in June 2019, with the $384 million purchase of a 49 percent interest in an approximately 1.5 million-square-foot office condominium at the 90-story 30 Hudson Yards office skyscraper, the second-tallest office building in New York. With the closing of the transaction, New York became Allianz Real Estate’s fifth most significant city in the world in terms of total exposure.