An European logistics real estate fund managed by Singapore-regulated Elite Partners Capital sold its entire portfolio to Blackstone European Property Fund managed by Blackstone Group for €520 million ($590 million).
Elite Logistics Fund I was founded in 2020 as a two-year, closed-end fund listed on the private market exchange ADDX. The sale of all 18 of its properties to Blackstone, the Elite fund has now earned more than double its 12% per annum target returns.
The Elite fund was invested in mature, income-producing logistics warehouses in the UK, Poland, Germany, Czech Republic and Spain. Tenants consisted of large multinational corporations such as DHL, Pepsi, FM Logistics, Fiege, Havi Logistics and Next, officials said.
Portfolio Director of the Elite fund Enoch Tan said that the pandemic fed demand for space in logistics and e-commerce facilities as supply chain disruptions led companies to increase inventory levels for food, essential goods and other consumer products.
For example, the $740 million Elite found that high-tech facilities at the cargo terminal at Prague airport were involved in vaccine storage and delivery.
“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 U.K. arising from Brexit,” said Tan. “This strategy paid off, as we acquired assets which were fully tenanted and achieved 100% rent collection throughout the pandemic.”
Elite had viewed a large number of the properties physically before the end of 2019, before travel to Europe was hampered by the pandemic. The Singapore firm also has full-time employees based in the U.K. and Europe and was able to rely on a key investor in the fund and a strategic partner Macquarie Capital Principal Finance.
Going forward, the e-commerce and logistics real estate sectors are expected to grow further, officials said. According to Prologis Research, the global e-commerce penetration rate is projected to rise to over 25% in 2025, from around 15% in 2019.
“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 Elite Commercial REIT, which completed its IPO in February 2020,” said Tan.
According to ADDX Chief Commercial Officer Oi-Yee Choo, private real estate funds look compelling in the current market, offering an income play along with the potential for asset appreciation.
“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,” she said. “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.”
