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Apollo sources €800m logistics financing

Aareal Bank has financed a pan-European portfolio in the latest large financing deal in the sector.

German bank Aareal has provided Apollo Global Management with a debt facility of up to €800 million to finance a pan-European portfolio of logistics properties.

The five-year “tailor-made” facility provides “stability, security, and flexibility” for Apollo’s pan-European logistics portfolio, the bank said.

The financing supports Apollo’s plans to grow its platform of logistics properties over the coming years, said Dominik Jais, partner, European principal finance at Apollo.

“We were able to provide this complex financing for a cross-border portfolio, together with such renowned partners, within just 10 weeks,” added Christof Winkelmann, member of the management board of Aareal Bank.

Apollo, the New York-based investment giant has already shown faith in European logistics assets. In October 2017, it partnered Palmira Capital Partners, an asset manager that specialises in logistics assets, to form a joint venture with the aim of investing €1 billion in core and future core assets in Germany, the Benelux, Central and Eastern Europe, France, Spain and Portugal.

The deal comes at a time when the European logistics sector has been subject to a series of large financing deals, driven by the huge volume of equity in the global real estate market, which investors are competing to deploy.

In October last year, European logistics platform Gazeley was sold by Canadian property giant Brookfield to Singaporean warehouse specialist GLP for $2.8 billion. The deal, which GLP said it would fund with $1.2 billion of long-term debt, included a portfolio of logistics assets across the UK, Germany, France and the Netherlands.

In June, Blackstone sold its Logicor platform to China Investment Corporation for €12.25 billion, in the largest transaction ever in the European logistics sector. The deal was reported to be funded with a €6.8 billion loan from Bank of China and China Construction Bank, of which €3 billion would enter the syndication market, with Chinese banks thought to be first in line to participate.

A month earlier, AXA Investment Managers – Real Assets, the subsidiary of French insurance giant AXA, purchased Gramercy Property Trust’s European logistics assets in a €1 billion deal. The portfolio of 39 logistics assets across nine European countries was financed by several loans, and AXA IM kept the existing debt in place following the acquisition.

European logistics fundamentals remain solid for now. In 2017, investment volumes reached €41.3 billion, 80 percent up compared with 2016, according to JLL. Europe’s vacancy rate was below the 5 percent mark in Q4 2017, down from 6 percent the previous year. Meanwhile, speculative development accounted for 24 percent of the 12.3 million square metres under construction last year – which is down by 1 percent compared with 2016.