Global Logistics Properties (GLP), a global provider of modern logistics facilities, is set to acquire Gazeley, a developer, owner and operator of modern logistics facilities in Europe for $2.8 billion (€2.4 billion).
The transaction is expected to be funded by approximately $1.6 billion (€1.4 billion) of equity and $1.2 billion (€1.0 billion) of long-term, low-cost debt. GLP will fund its equity commitment with cash on hand, existing credit facilities and new indebtedness. No additional equity will be issued to fund this acquisition.
The entry into the European market is not expected to impact the timeline of the proposed privatization of GLP.
According to details in a media release, this transaction provides GLP with one of the highest quality portfolios in Europe as well as an experienced local management team with a strong development track record.
GLP intends to inject the Gazeley portfolio into its fund management platform, in line with previous practice. Investor demand to partner with GLP in the European logistics market is strong and the company is already in negotiations with interested capital partners. The existing management team and Gazeley brand will be retained. It currently maintains five offices across Europe.
Ming Z. Mei, Co-Founder and Chief Executive Officer of GLP, said, “We have been looking to expand to Europe and this portfolio presents an attractive entry point given the quality and location of the assets. This transaction adds a premier operational and development platform for us in Europe and is part of our long-term strategy to expand our fund management business.”
The 32 million square feet acquisition portfolio is concentrated in Europe’s key logistics markets – the UK (57 per cent), Germany (25 per cent), France (14 per cent) and the Netherlands (4 per cent) – and comprises 17 million square feet of existing assets, which are 98 per cent leased with a weighted lease expiry of nine years, and a development pipeline of 16 million square feet buildable area.
Approximately 60 per cent of existing assets have been built within the last five years, while 85 per cent of the development pipeline is focused in the UK, which is one of Europe’s most land-constrained markets.
The acquisition also comes at a time of strong macroeconomic performance in Europe, which is seeing e-commerce drive growing demand for logistics space, as well as falling unemployment and record low vacancies.