Elite Logistics Fund I, which is managed by Singapore-related Elite Partners Capital, has sold its entire portfolio of 18 properties to The Blackstone European Property Income Fund, managed by Blackstone Group.
The properties sold for a total consideration of EUR520 million ($792.2 million).
“As we approached the end of the fund’s two-year mandate, we considered all possible options, including an IPO for the fund, which would allow Logistics Fund I to follow in the footsteps of its sister company [SGX-listed] Elite Commercial REIT which completed its IPO in February 2020,” says Enoch Tan portfolio director of Elite Logistics Fund I.
“Following a thorough assessment, we concluded that the private sale to Blackstone yielded the highest returns to investors, which made it the most attractive option,” he adds.
Elite Partners Capital has over $1 billion of assets under management (AUM).
The Elite Logistics Fund I was launched in early 2020 and is a two-year, close-end fund listed on ADDX. Individual accredited investors from ADDX had subscribed to the fund in two separate offerings in June and December 2020. The fund units were tokenised by ADDX, with a reduced minimum investment size to EUR20,000 from EUR1 million due to the efficiency of blockchain and smart contracts.
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The fund was invested in mature, income-producing logistics warehouses in the UK, Poland, Germany, Czech Republic and Spain. The tenant mix comprised large multinational corporations (MNCs) like DHL and Pepsi.
With the completion of the sale, the fund by Elite has achieved annualised returns of more than double its target of 12% per annum.
So far, ADDX investors have received some 98% of the proceeds from the sale to Blackstone. The remaining funds will be distributed once the fund is formally concluded later in the year.
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According to Tan, the pandemic has seen a surge in the demand for space in logistics and e-commerce facilities, due to the supply chain disruptions, which prompted companies to increase their inventory levels. The high-tech facilities at the cargo terminal at Prague airport were also involved in vaccine storage and delivery, he adds.
“Our investment approach focused on well-performing logistics real estate in developed European markets. Even prior to the pandemic, we were bullish about logistics because of the broader expansion of the e-commerce industry and new demand for space in the UK arising from Brexit,” he says.
“This strategy paid off, as we acquired assets which were fully tenanted and achieved 100% rent collection throughout the pandemic. In contrast, rent collection for retail and office space plummeted to under 50% across Europe. In the past two years, the rate of rental collection became one of the key performance matrices for real estate investments, and because of this, logistics assets were highly sought after due to their consistently low rates of rental delays and defaults,” he continues.
ADDX chief commercial officer Oi-Yee Choo says, “Private real estate funds continue to look compelling in the current market, offering an income play along with the potential for asset appreciation. Investor demand for real estate offerings has therefore been robust over the past year, especially when they involve the logistics sector.”
She adds, “The stellar performance of this fund also underscores the importance of investing with experienced, high-quality asset managers like Elite, who are equipped with a well-thought-out investment strategy as well as a proven ability to execute on it. The case for investing in a fund also becomes stronger when there is a strategic limited partner (LP) investor with global reach, such as Macquarie in the case of this fund.”
