IDI Gazeley Buys Warehouse Portfolio

The logistics real-estate arm of Canadian firm Brookfield Property Partners LP has bought a portfolio of 13 warehouses in the Netherlands.

IDI Gazeley on Monday said it acquired the properties from Dutch real-estate fund Eurindustrial NV. The deal, at just under €110 million ($124 million), marks IDI Gazeley's first investment in the Netherlands, broadening its European presence.

The warehouses are leased to companies including United Parcel Service Inc. and Canon Inc.

Industrial warehouses in Europe have attracted strong investment this year as investors, on the hunt for returns, have tuned in to a growing need among retailers with growing online-delivery businesses for distribution capabilities.

The investment volume of industrial property was €6.1 billion in the second quarter, up from around €5 billion in the year-earlier period, according to broker CBRE.

The increasing level of investment has steadily pushed returns lower. In Europe, the capitalization rate—a measure of yield—for industrial property in the third quarter was 6.6%, having fallen consistently each quarter from 8.1% in the second quarter of 2013, according to Real Capital Analytics.

"We have seen strong demand" for this and other logistics portfolios, said Pat McGillycuddy, chief executive, Europe and China, at IDI Gazeley.

Increased investment into real-estate assets around the world has sparked concerns that the market for offices, shopping centers and warehouses could be overheating.

Brookfield isn't the only global real-estate investor to expand its footprint in European warehouses. Blackstone Group LP created a logistics arm, Logicor, in 2012 to buy up European logistics sites. Last year the group more than doubled the size of its portfolio to over €2 billion.

IDI Gazeley has warehouse holdings valued at over $3.6 billion in North America, Europe and Asia, with 57 million square feet of assets under management. It operates in seven counties in Europe, and is planning to continue acquiring assets in the Netherlands and elsewhere, Mr. McGillycuddy said.

Write to Art Patnaude at [e-mail]

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October 05, 2015 08:15 ET (12:15 GMT)

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