Jersey’s Delin starts logistics development projects

Property Investor Europe 2 June 2016

Private logistics advisor Delin Capital Asset Management, which has been acquiring and managing assets in the UK and western Europe on behalf of investors, will now move into development and ownership under the leadership of Ekaterina Avdonina.

The company has launched its first large development project in the Netherlands – a 40,000 sq.m. logistics warehouse located close to the port of Rotterdam and Moerdijk and valued at €30m, it said in a statement today. The company’s new strategy will also encompass ownership and active management of warehouse and last mile urban logistics distribution properties.

jerseys-delin-startsEkaterina Avdonina

Avdonina, who will lead the strategic change, commented: “I am excited to be leading the next phase of DCAM’s evolution which will see it become a full-service western European logistics company, building on our existing expertise and track record in the sector. We firmly believe that logistics assets (both big box and urban units) will continue to benefit from strong occupational
demand supported by the structural shifts that are taking place in the purchase and delivery of goods driven by E-commerce.”

DCAM hired Bart de Sitter as development director and added Amos Chia to its investment team, putting him in charge of identifying and underwriting new acquisitions, to strengthen the team.
Established in 2012, DCAM currently manages a portfolio providing more than 550,000 sq.m. of warehouse and distribution space.

DCAM Announces Strategy to Become Full-Service Western European Logistics Player

Delin Capital Asset Management Announces Strategy to Become Full-Service Western European Logistics Player Under Leadership of Ekaterina Avdonina

02 June 2016 – Delin Capital Asset Management (‘DCAM’ or the ‘Company’) has announced a new strategy to become a multi-faceted (full service) leading European logistics real estate company, under the leadership of Ekaterina Avdonina. The company was established in 2012 to focus on the acquisition and management of core logistics assets in the UK and Western Europe on behalf of investors.

Ekaterina has been appointed managing director DCAM, succeeding Christian Jamison who left the business to pursue other interests. She has a strong track record in the logistics sector having been the CIO since the Company’s inception and has been integral in growing the Company’s assets under management to over €500m.

To date the Company has acted as an asset manager, making investments on behalf of clients solely into prime logistics assets in the UK and Benelux. Currently the Company manages a portfolio providing over 550,000 m² of warehouse and distribution space.

Under Ekaterina’s leadership the Company’s strategy will evolve to encompass the development, ownership, and active management of best in class warehouse and last mile urban logistics distribution properties which are well located and which are set to benefit from increasing growth in e-commerce and Europe’s logistics supply chain. DCAM will aim to think innovatively and remain at the forefront of technological changes that impact and challenge the logistics real estate sector.

In an initial move towards this, the Company will start to engage in development and today is pleased to announce its first large scale speculative development in the Netherlands of a 40,000 m², €30 million GDV logistics warehouse close to the ports of Rotterdam and Moerdijk. The prime location is attractive for DCAM because of current low vacancy rates and strong take up.

The Company is also pleased to announce a number of new appointments, providing further strength and expertise to the business.

  • Bart de Sitter has joined as development director. Prior to joining DCAM he held various roles in construction and development companies focussed on logistics and industrial.
  • Amos Chia has joined the investment team and will be responsible for identifying and underwriting new acquisitions. He joins from Revetas where he was a Senior Investment Analyst.

Commenting, Ekaterina Avdonina, managing director, DCAM, said:

“I am excited to be leading the next phase of DCAM’s evolution which will see it become a full-service Western European logistics company, building on our existing expertise and track record in the sector. We firmly believe that logistics assets (both big box and urban units) will continue to benefit from strong occupational demand supported by the structural shifts that are taking place in the purchase and delivery of goods driven by E-commerce. With a strong team in place, we are well positioned to identify further investment and development opportunities in order to grow our business and to become a key player in the European market.”

E-commerce drives value and opportunities in logistics across Europe

Logistics property breakfast


European logistics boom to accelerate as e-commerce takes hold

The rapid evolution of the logistics sector will accelerate in the coming decade as e-commerce grows across Europe, drawing even more investors into what has become a mainstream property sector closer aligned to retail than its industrial roots, the logistics property breakfast audience heard.

“What we have seen in the last 10-15 years is nothing compared with what we will see in the next 10-15 years,” declared Smith. He acknowledged that logistics has grown from a niche play into a mainstream property sector, accounting for some 11-13% of commercial real estate volume in Europe. However, he added that it had much further to go as the continent has three times less warehouse space per capita than the US, and e-commerce typically requires three times more % floor space than normal logistics, which could mean up to nine times more capacity is needed. “ at number is probably an exaggeration,” Smith admitted. “But imagine any other property sector – any other industry – that could go through that thought exercise with you and talk about being nine times underserved for a particular core product they sell.”

“The e-commerce market has made it much easier for investors to understand what logistics is. We have seen a lot more investors come into the market in the last few years and we have seen contraction in yields because of that capital,” Beyer said.

Yields on prime logistics in core markets now vie with shopping centre or office yields below 5% in the UK, with Germany likely to follow soon. “Capital values in some markets have peaked – the UK has really peaked – but in some European markets we think the capital values are still below their previous peak levels,” said Ekaterina Avdonina, managing director at Delin Capital Asset Management. “We still see a lot value attracted to fundamentals in core markets,” she said, adding the structural shift in logistics means it has emerged as an institutional real estate sector in its own right, separate from industrial property and in some instances more closely correlated to retail property.

That shift along with the potential for 10 and 20-year leases with blue-chip e-commerce companies is increasingly attractive for conservative investors who want long term security. “We are having more conversations about logistics. People who would never have considered logistics are now asking questions and are seriously considering it,” De Blasio said. He gave the example of a large Italian pension fund which has never invested in logistics before but sees that it is a valuable investment sector that can help it fund pension liabilities in 20, 30 and 40 years’ time. “ they are convinced logistics will be there in the future,” De Blasio said. pie

Lines blur between logistics and retail

As e-commerce makes logistics an easier sector for investors to understand, it is also blurring the lines between more traditional retail subsectors and those warehouses geared towards online retail. “Now we are at level where I would say – what is the difference between a retail warehouse park and logistics? It’s a very similar story in the end,” Beyer said. Avdonina agreed that mainstream logistics may be more closely correlated with retail warehousing. “I think we will see some more subsectors of logistics being more closely aligned with retail,” she added.

Smith went even further and speculated that logistics assets could ultimately account for 40% of commercial property volumes as new formats may bring it closer to offices also. “You are going to see it bleeding into other sectors; you are going to see a blurring of the lines between logistics and retail. But why not between logistics and offices? Or logistics and multi-family? It’s kind of invading other sectors. It does not need to be the big XXL build-to-suit,” Smith said. He said the continued rise of e-commerce put logistics “at the start of the trend, not at the end of the trend”.

The shift in perceptions surrounding logistics is also leading to a rapid contraction in yields. Audience members spoke up about recent deals for UK logistics assets that priced at yields of 4.5% and 4.75%, as well as an Amazon warehouse in Poland at under 5.5%. “The yield compression which comes with a lot of capital going in is a correction,” Beyer explained, adding that he believes prime yields in Germany will also go through 5% this year.

However, investors still need to take care not to invest in poor locations, or fall foul of furious levels of development which are increasing supply. “We talk about capital values and cap rates [but] people also have to watch out for the rent levels,” Avdonina said. “What will be the ERV (estimated rental value) of the large logistics hubs going forward, and how that would balance with secondary stock is a big question in my mind,” she added. pie

E-commerce drives need for variety of spaces

The all-pervasive rise of online retail is having a big impact on the volume of space being taken by tenants. Not only do those companies need about three times more space than traditional warehouse tenants per €1m of revenues, but the explosion in the number of tenants is still rising. “2015 was a very good year for take-up. It surpassed ten-year averages and  ve-year averages across all the countries,” Avdonina said. “About 30% was e-commerce take-up – and that didn’t exist before 2008-09.” From Beyer’s experience, about one-third of logistics lettings turnover in Germany was driven by the retail sector – with the majority of that stemming from online retailing – putting the segment well ahead of more traditional industrial logistics. E-commerce tenants in particular need property of different sizes and locations to  t their business models. “We do see the big boxes are still very much in demand. But there is also the much smaller stuƒ closer into the city, which has been much more tricky to  nd – and that’s why there might be a little bit more value in there,” Beyer said.

“Investor and tenant demand remains high in pretty much all cases,” Smith added. Demand for 100,000 sq.m. XXL warehouses has been a function of the emergence of global online platforms like Amazon after build to-suit facilities on long leases. In addition, e-commerce companies need small units close to towns and cities that can serve for so-called “last mile” parcel delivery and accept customer returns. In some cases, imaginative developers are repositioning shopping centres to meet that demand. But despite the very particular needs of online retailers, more traditional logistics centres of about 30,000 sq.m. are still sought after, with virtually all sites built in the speculative glut before the  financial crisis now taken by tenants. “ ere is no risk of immediate functional obsolescence,” Smith added.

Although e-commerce is the principal driving factor, manufacturing trends are also reshaping demand for industrial property. The return of manufacturing to Europe’s largest economies from cheaper locations in eastern Europe and China is breathing new life into factories and supply chains. “We are beneftting from the onshoring process – taking business to Italy from eastern Europe and China. But what I see is not demand for new spaces but demand to revamp existing stock,” De Blasio said. He gave the example of Italian car manufacturer FIAT, which is investing heavily to restart auto production in Milan and southern Italy. pie

Demand across Europe but investors to be wary

Investor demand for logistics is widespread across Europe, with many open to all countries. “Global platforms are not necessarily focusing on specifc markets. I see that investors are now considering Europe as a market and they are trying to pick up opportunities west and east,” De Blasio said, although he added: “Many of my clients see Poland as a must-go destination for logistics.” He also said that Prologis is considering Italy as an important investment destination, with changes in legislation in Italy, as well as Spain, lifting those locations up investors’ wish lists. “Italy and Spain used to have very protective tenant legislation, but now you can write what you want into a lease agreement. As a result, northern European tenancy laws are less attractive than Italy and Spain, and Italian and Spanish labour laws are more flexible,” he added.

Avdonina said investors should be wary of putting eastern European countries on a par with western and northern Europe. “Political risk is something that investors should underwrite. When you have Polish yields lower than in Benelux, I raise my eyebrows,” she said. Avdonina highlighted locations like Hamburg’s port area as ones where demand will always remain robust, and said investors should also consider countries’ legal systems and business transparency.

Yet, even in core countries like Germany, there are challenges. “Germany still has a lot of older sheds. I would think that more that 50% of the stock is older and might be outdated.  These stocks are often in very good locations, closer to the city and there is definitely potential in them. But all these sheds need to be refurbished, renewed and maybe even demolished,” Beyer said. He said that there has been more green field logistics construction in Germany and less brown field renewal.

Smith said there remain pockets of value across the continent, even though regions like central Europe and countries like Spain oƒ er fewer opportunities than a few years ago. Some investors are looking broadly across the entire continent for deals, although others are taking a different tack. Smith cited the example of a global real estate investor that has decided not to invest in all Europe simultaneously. “Let’s pick a small country oƒ the beaten path and put a % ag down there and try to get our head around that one country – which I think is probably just as good a strategy,” he said. “It doesn’t really matter much which market, value is to be found pretty much anywhere at this point in the cycle.” pie

Christian Jamison to leave Delin Capital Asset Management

Following the successful completion of the CPP1 Fund, a portfolio of sixteen prime, income producing, logistics assets in the UK and the Netherlands, Christian Jamison has chosen to pursue other projects outside of DCAM.

He will be leaving the business in February and will handover his duties to Ekaterina Avdonina, who will assume the role of CEO on his departure.

Christian has been instrumental in building the DCAM business and delivering the CPP1 Fund, and we thank him and wish him well for the future.

Urban logistics good long-term development strategy

Property Investor Europe

While European logistics offer opportunities across the board, urban schemes represent an especially good development strategy for the long-term, says Ekaterina Avdonina, Vice-President and Head of Investments at Delin Capital Asset Management, and panelist at the PIE Logistics Property Breakfast this month.

“Key gateway markets and major urban conglomerations all represent great development opportunities,” Avdonina told PIE in a pre-event statement. Urban logistics in particular is still relatively unsaturated across key European cities and thus represents a good development strategy for the long-term. “Over the short-term, we favour locations in land constrained markets with excellent multi-modal accessibility and good availability of labour, as all major logistics sites are becoming increasingly labour intense,” she added.

The sector in general has posted unprecedented investment volumes, surpassing the previous peak by 50%. “International capital is recognising the structural reconfiguration of supply chains in light of consumer spending changes and growth in e-commerce,” said Avdonina. She also underlined that modern logistics stock is scarce in Europe, both per capita and per GDP, when compared to other advanced markets such as the US. “These structural forces are behind the increase in investment volumes.” At the same time, the sector is experiencing a re-rating from an alternative to a mainstream property asset class alongside offices and retail. “Attractive fundamentals and higher yields make logistics and light industrials probably still the best "€˜priced’ asset class available today,” she told PIE.

Avdonina will be part of a panel of experts discussing value opportunities in European logistics at the PIE Logistics Property Breakfast on 29 October at the London City offices of law firm DLA Piper.

Strengthening Our Team With Appointments of Andy Colman and Jonathan Gardner

Delin Capital Asset Management, (‘DCAM’ or the ‘Company’), a Jersey registered real estate investment advisor and asset manager focused on investments in logistics assets in the UK, the Netherlands and Belgium, announces two senior appointments to strengthen its team.

Andy Colman joins the Company as Finance Director. He comes with over 25 years of experience within the fund management, real estate and investment sectors, having originally trained as a Chartered Accountant with PwC. His experience within the real estate sector encompasses three years as Finance Director of Aerium Finance where he oversaw over £600 million of investment into the UK office market. Prior to this, Andy served as European CFO for CBRE Global Investors, where he managed financial operations across five European offices, in addition to structuring and launching a number of Pan-European and UK value-add and core funds. He also supervised the business’ administration and investor reporting.

Jonathan Gardner, a former Regional Director of Ashtenne’s £500 million Industrial Fund, brings with him a proven track record of identifying and negotiating new acquisitions and commercial leases in the industrial and logistics sector. Having also spent nine years managing Warner’s £300 million Radial Fund, Jonathan oversaw all investment into the UK logistics property market. Most recently Jonathan worked for Mapeley Estates Ltd, where he headed a portfolio of 300 assets within the UK.

Christian Jamison, Chief Executive at Delin Capital Asset Management, added:

“As Delin Capital Asset Management maintains its commitment to expansion, it is essential that the strength and depth of our team grows with it. Andy and Jonathan are fantastic senior additions to our business, and their combined industry experience and knowledge will provide us with an invaluable insight and expertise in logistics and fund management, which we will look to leverage as we continue to grow.”

Delin Capital Acquires G-Star RAW Distribution Centre

In a Sale and Leaseback Transaction will be The Fund’s Second in The Port of Amsterdam.

Delin Capital Asset Management (‘DCAM’ or the ‘Company’), a Jersey registered real estate investment advisor and asset manager focussed on logistics assets in the UK, the Netherlands and Belgium, has acquired for its clients a high specification warehouse in the Port of Amsterdam through sale and leaseback transaction with G-Star Raw, the jeansretailer.

The 37,000 m² modern property, which was built by G-Star within the last two years, is used as the global e-commerce and fulfilment centre for G-Star Raw. It is let on a full repairing lease with an unexpired weighted average term of 11 years.

The transaction represents the second acquisition by DCAM in the Amsterdam port, following its purchase of Casablancaweg 8, a 107,000 m² multi let logistics asset in December 2014. With this latest purchase, DCAM’s total portfolio in the Netherlands extends close to 380,000 m² of prime modern logistics space making DCAM one of the most active investors in Benelux logistics market over the last few years. DCAM’s total European logistics portfolio now comprises some 550,000 m² with a value of close to EUR 0.5 bn.

DCAM financed the acquisition with a new 5 year term loan from ING Real Estate Finance who also financed the purchase of Casablancaweg 8.

Christian Jamison, Chief Executive Officer of DCAM commented:

“This, our second sale and leaseback transaction, provides us with access to a high quality asset with a strong covenant, As retail patterns continue to shift towards the e-commerce market, we believe we are strategically positioned to benefit from this growth, having invested in core, well located assets. We look to continue to build relationships with strong tenants, such as G-Star Raw, and the structure of this agreement is one we would like to continue to replicate across the logistics market.“ “Furthermore, as the fourth largest port in Europe, this transaction supports our strategy to grow the Fund through identifying key strategic hubs like the Port of Amsterdam, which will continue to attract tenants and investors.” DCAM was advised by JLL, CVO and CMS, Nauta advised ING and Houthoff and DTZ advised G-Star.

Delin Capital Secures 212,000 sqft Letting to The Range

Delin Capital Asset Management, (‘DCAM’ or the ‘Company’), a Jersey registered real estate investment advisor and asset manager focused on investments in logistics assets in the UK, the Netherlands and Belgium, announces the letting of its 212,000 sq ft distribution centre at Swift Valley Park in Rugby to The Range on a 10 year lease.

The vacant building was acquired by DCAM as part of a portfolio acquisition and was refurbished prior to completing the letting.

The Range is one of the UK’s fastest growing homeware retailers, operating from retail parks and online, and will use the unit as a new distribution centre to satisfy its online orders. Swift Valley Park is strategically located within the UK’s logistics ‘Golden Triangle’ formed by the M1, M6 and M69 motorways.

Commenting, Christian Jamison of DCAM said:

“This transaction demonstrates the strong occupational dynamics for good quality distribution space driven by the continued growth in on-line retail sales.”

NRS and DTRE acted on behalf of DCAM.

Delin Capital Kicks Off the New Year with €40 Million Off-market  Netherlands Purchase

Delin Capital Asset Management, (‘DCAM’ or the ‘Company’), a Jersey registered real estate investment advisor and asset manager focused on investments in logistics assets in the UK, the Netherlands and Belgium, has acquired a 44,142 m² modern, high specification distribution warehouse in Waddinxveen, the Netherlands, through a €40 million sale and leaseback transaction from Van Uden Group, a privately owned European logistics operator. The asset was acquired for DCAM’s Capital Preservation Portfolio I, (‘CPP I’ or the ‘Fund’), the Company’s inaugural core plus logistics fund. It is the seventh Dutch asset acquired by the Fund and takes CPP I’s total investment to over €400 million.

The 44,142 m² freehold distribution warehouse was built in 2011 and it is situated in the established strategic location of Distripark A12, in the municipality of Waddinxveen, well positioned to benefit from neighbouring Rotterdam, Europe’s largest port. Van Uden Group has taken a new ten year lease, without breaks, on the warehouse and will use it to satisfy multiple food and beverage contracts for its clients, which include Nestle.

Christian Jamison, Chief Executive Officer of DCAM commented:

“Once again, we are pleased to have been able to capitalise on our reputation as being a strong transaction partner to source another deal off-market. This is a high quality, well located, modern logistics asset, which will generate attractive income returns for our investors. Furthermore, having acquired the asset using our existing cash resources, we can leverage the investment later in the year, with a view to making further acquisitions in the European logistics market when we identify suitable opportunities.”

Delin Capital was advised by Jones Lang Lasalle and CMS Derks Star Busmann.

Retail revolution sparks change in logistics sites

Kate Allen, Financial Times

Delivery firms may not be expected to match Santa Claus’s dash around the world in a single night but many are coming under pressure to meet tighter deadlines.

The move to same-day and next-day deliveries is forcing retailers and distributors to make radical changes to their property portfolios. Logistics companies have previously required fairly humdrum industrial property — and their breeze-block sheds have struggled to compete with glossy offices and bustling shopping malls for investors’ attention. But getting things to where they need to be is no longer such a simple matter.

The problems faced by delivery network Yodel and retailer Tesco earlier this month in coping with a deluge of parcels highlighted the practical challenge that retailers and distributors face.

Before the advent of E-commerce, distribution activity was largely focused on a handful of huge hubs such as the UK’s golden triangle in the Midlands and the Benelux corridor stretching inland from Europe’s biggest ports, Rotterdam and Antwerp.

Those hubs are still in demand but a new array of smaller sites of 70,000-100,000 sq ft (one or two football pitches) are also developing around major population centres in order to fulfil faster delivery times and supply local convenience chains.

Gareth Osborn, logistics director at listed industrial property specialist Segro, says: “Retailers are taking industrial units around the main conurbations, to break up big lorry loads into lots of small deliveries in a fleet of small vans. That requires a different type of building [to traditional big-box facilities].”

About 35 per cent of Segro’s tenants are parcel delivery companies, third-party distributors and retailers, up from 10 per cent a decade ago.

Access to land is the biggest problem for these new facilities, Mr Osborn says, with housing developers in particular proving tough competition.

A shortage of suitable space means that investors expect rents to rise in the next couple of years. “In the short term there’s a bit of a capacity problem, with parcel numbers going through the roof,” says Christian Jamison, chief executive of Capital, which launched a £400m pan-European logistics fund in 2012.

As a result, investors have been piling into this asset class this year. European logistics property investment volumes jumped by a third to top €20bn in the 12 months to the end of September, according to figures from Standard Life Investments.

One reason for this demand is the high returns. European industrial property — including logistics — produced an 8 per cent total return in that period, compared with 5.7 per cent from offices and 5.6 per cent from retail, according to data company IPD.

“What resonates with investors about logistics is that it’s a very defensive asset class to invest in,” says Mr Jamison. “Even in the absence of economic growth you will get increasing demand for logistics because E-commerce is taking up more of the retail market.”

Demands are also changing for the bigger, out-of-town warehouses more traditionally used by retailers and distributors.

Buildings are becoming taller, with ceiling heights rising from 6-7m up to as high as 25-30m, and wider, with floor space of up to 1m sq ft — the size of 23 football pitches. Technology such as automated packing systems and mechanised storage means tenants can cram more into their buildings.

“The size of these assets now gives international investors the opportunity for scale,” says David Paine, head of real estate at Standard Life Investments. “It is becoming increasingly hard to deploy a lot of capital into offices and retail quickly, but large-scale logistics platforms enable investors to do that.”

UK-listed retail landlord LondonMetric began to move into logistics property two years ago. Its chief executive Andrew Jones says it was a natural next step. “I look at distribution as the fifth type of retail property, alongside shopping centres, supermarkets, retail parks and the high street. As this Christmas is demonstrating, most retailers don’t have [logistics] space which is fit for purpose,” he says.

Investors’ push into Europe follows a similar trend in North America. “Investors are looking at Europe as a place where you can get a significant spread compared to the US market,” says Philip Dunne, president of the European division of Prologis, one of the world’s largest logistics landlords.

Blackstone led the way in the US from 2010 onwards, accumulating the $8.1bn IndCor portfolio that it sold earlier this month to Singapore sovereign wealth fund GIC. It is now trying to replicate the portfolio in Europe with its Logicor platform, which has accumulated 61m sq ft of space across 12 countries.

Mo Barzegar, Logicor chief executive, says four global trends are driving the need for “a more sophisticated supply chain”: globalisation, consumption growth, urbanisation and the changing face of retail.

While few in the industry have the global coverage of Santa, the emergence of pan-continental distributors and retailers also means that even the biggest logistics landlords need to deal with relatively few tenants.

“It is a very homogenous asset class — whether you are in London, Barcelona, Prague or Moscow the boxes are the same and the occupiers to a large extent are the same,” says Mr Jamison.