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Logistics-Focused Private Real Estate Fundraising – May 2015

by Charles Wood

  • 26 May 2015
  • RE

Private real estate vehicles targeting logistics properties as part of a wider focus have seen growth from 4% of all funds closed in 2006 to 11.4% in 2015, reflective of the increase in investment opportunities in this sector. Despite an overall increase in the proportion of funds targeting logistics properties, the sovereign debt crisis led to a decline in fundraising for these vehicles in 2011. However, an improving economic environment culminated in 20 vehicles closing in 2014, worth $10bn, yet fund managers do not appear keen to invest exclusively in this property type. Over the past nine years, only 21 solely logistics-focused funds have closed raising $7bn, according to Preqin’s Real Estate Online service. So far in 2015, no solely logistics-focused funds have closed. However, there have been two separate account mandates awarded for an aggregate $700mn.

Fundraising for solely logistics-focused private real estate funds has fluctuated since 2006, with 2013 and 2014 raising more capital than the preceding seven years combined. This could be indicative of an increasing confidence by fund managers to solely target logistics properties. Strategically, primarily core and opportunistic funds have accounted for approximately three-quarters of logistics fundraising since 2006. Geographically, Asia has dominated the market for logistics-focused funds over the past nine years, with over 50% of funds closed targeting the region. As a newly industrialized country, China presents a higher concentration of investment opportunities in logistics real estate compared with other regions. Interestingly, no solely logistics-focused vehicles have closed targeting North America in the time period.

As the table above shows, the largest solely logistics-focused fund to close since 2006 was CLF Fund I, a China-focused vehicle managed by Global Logistics Properties. The opportunistic vehicle held a final close in November 2013 and will target the development of modern logistics facilities across China. With only one solely logistics-focused fund currently in market, fund managers still feel the best way to access logistics properties is through a diversified property focus; there are currently 15 such vehicles in market targeting $5.8bn in capital commitments.

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