PGIM refinances London last-mile logistics portfolio

Investment manager PGIM Real Estate has provided a loan to industrial property owner Valor Real Estate Partners, in a major example of a refinancing deal in the last-mile logistics segment of the London market.

The floating-rate, senior loan refinances 11 assets in the Greater London area, with an aggregate floorspace of 518,000 square feet. PGIM did not confirm the size of the loan, although it is understood to be around £80 million (€93 million).

The loan deal is the fourth to be completed between PGIM and Valor, which has an overall portfolio of more than 11 million square feet across Europe.

The portfolio that PGIM has financed is 99 percent occupied by 22 tenants, including multinational corporations. Six of the assets are located within London’s North and South Circular ring roads.

James Mathias, portfolio manager for senior debt at PGIM Real Estate, said demand for last-mile industrial remains strong in prime locations, supported by the tailwinds of e-commerce and emerging industries such as green energy supporting leasing activity.

“Against the backdrop of challenging market conditions, we have conviction in high-quality industrial and logistics properties in in-fill urban locations, such as this portfolio,” said Mathias.

PGIM provided the financing through its senior debt strategy, PGIM Real Estate Senior Europe, which is predominantly focused on floating-rate loans. Overall, PGIM’s real estate debt platform has completed more than €11.4 billion across 207 senior and high-yield debt investments in the UK and continental Europe.

“This hard-to-replicate portfolio of ‘true’ last-mile assets is located within the North and South London circular ring roads with excellent connectivity across London,” said Miles Muthu, vice-president at Valor. “Valor’s comprehensive ESG refurbishments undertaken on the majority of the assets has resulted in buildings boasting specifications highly sought after by last-mile tenants and operators.”

In its UK Logistics Q1 2023 report, property consultant CBRE said overall logistics take-up in England’s south-east totalled 1.9 million square feet across 10 deals, with the largest share of take-up for build-to-suit schemes. Third-party logistics occupiers were the most active tenant group, accounting for 700,000 square feet of take-up. CBRE added that the availability of logistics space in the region grew 25 percent quarter-on-quarter, driven by second-hand units being released into the market and bolstered by further units under construction.