Tristan lines up biggest deal yet with €472m logistics sale to Segro and PSP

Rising values lead manager to sell German, Polish and French assets, many held for just two years

Tristan Capital Partners is selling 14 logistics assets to Segro and PSP for €472m –  the four-year-old, pan-European manager’s largest deal. The sale, which comes less than three years after most of the assets were acquired, is  also a sign of the speed of the recovery in values, driven by investor demand for assets. Segro European Logistics Partnership (SELP) is buying  10 assets in Germany, three in Poland and one in France from Tristan’s core-plus fund CCPIII and opportunity fund EPISO, which Tristan co manages with AEW Europe.

Tristan launched CCPIII in 2011 and its team continued to co-manage the 2008-vintage EPISO after leaving AEW. Tristan has since raised €950m of capital for its own EPISO fund. Rui Tereso, partner and head of portfolio and asset management, said Tristan had not expected to sell the assets so quickly: “We haven’t sold much yet – we’ve only been capital raising for three years and we are more active deploying than selling.”

CCPIII still has a year left of its investment period. “But the European market is pretty hot right now,” Tereso added. EPISO owned the three Polish buildings, bought from Standard Life in 2010, and three German assets in Leipzig, Berlin and Ingolstadt, which were developed in a joint venture established in 2011 with Verdion. The assets from CCPIII were three more Verdion joint-venture German properties, and two German assets and a French building, all acquired in the past two years.

Also in Germany, land and one development were sold. Tereso said Tristan detected “a clear shift” in the European logistics market in the middle of last year when Blackstone launched Logicor, several joint ventures were set up and Schroders sold a German logistics portfolio at a price 15% higher than the level that Tristan bid at. “We went from being a net buyer to a net seller.

“If we can execute a five-year plan in 12-24 months we have learned to always take advantage of selling into a rising market.” He said the sale exceeded Tristan’s mid-teen internal rate of return and 1.6 times equity multiple targets for its funds. Tereso expects to sell €1.2bn-€1.5bn of assets this year, including the SELP portfolio. “But we still see many opportunities and are starting to look more actively in Spain and Italy, and also in Denmark and Sweden.”

Pbb and Aareal to bankroll SELP’s buy

Segro said SELP plans to use debt to finance its logistics acquisition from Tristan, “in line with its stated policy of having a loan-to-value ratio of approximately 40%”. Pbb Deutsche Pfandbriefbank is thought to be in pole position to finance the German assets, while SELP intends to take over the existing financing with Aareal Bank on the French asset in Port of Marseilles and the Polish schemes in Warsaw, Lodz and Poznan. Tristan’s lenders were pbb, Landesbank Berlin, Aareal and DekaBank.