Munich-based investment manager LIP Invest is continuing the investment phase of its special fund LIP Real Estate Investment Fund - LOGISTICS GERMANY V. Since the launch last autumn, more than EUR 150 million has already been allocated to German logistics real estate. The company has thus secured around half of the targeted total investment volume of approximately EUR 350 million. The fund, administered by IntReal, is structured for a term of ten years.
The portfolio assembled to date consists of properties with long-term, indexed leases. Eleven equity subscriptions from institutional investors have been secured for the fund so far, including savings banks, commercial banks and foundations. According to company information, a further closing is imminent.
Conservative financing structure and core strategy
As Managing Director David Zimmermann explains, the willingness of long-term-oriented institutional investors to deploy capital has recently increased noticeably. Against the backdrop of the altered interest rate environment, fund management is intentionally managing leverage defensively. This maintains the flexibility to raise debt financing smoothly as interest rates fall in the future and take advantage of market opportunities.
Sebastian Betz, Managing Partner of LIP Invest, puts the planned debt ratio at around 40 per cent. Despite this conservative gearing, an average distribution yield of more than 5.30 per cent over the fund life is targeted. The current market environment permits the selective purchase of high-quality properties with sustainable potential for value appreciation from the firm's own acquisition pipeline.
- —Focus on modern, fungible logistics properties in established locations
- —Long-term indexed leases with creditworthy occupiers
- —Conservative debt ratio of around 40 per cent
- —Targeted distribution yield of over 5.30 per cent p.a.
Shortage drives space demand across total portfolio
Alongside its fund activities, the company is recording strong occupier demand across its entire portfolio. Whilst speculatively initiated new-build developments are declining noticeably nationwide, the requirement for modern warehouse space remains high. Natalie Weber, Authorised Signatory and Head of Fund Management, attributes the increasing demand for space partly to EU regulations against duty-free low-cost imports. This is increasingly prompting Asian retail businesses to establish their own logistics structures within Germany.
Logistics service providers in particular are currently driving market activity. The entire portfolio managed by LIP Invest, with a lettable area of 1.4 million square metres, is currently fully let. This sustained excess demand is expected to lead to further rental growth in prime logistics locations going forward.
