Deutsche Post DHL Group is arousing the interest of real estate investors in Europe with a big sale in the offing, described by experts as having a rare element to it.
Its logistics arm, DHL Supply Chain, has hired JLL to market the portfolio in Continental Europe, and those aware of a teaser document say it is interesting not just due to the potential size but also due to the structure of the proposed deal.
It is said that the 3PL giant’s global capital markets team, which is led by Ben Segelman, is offering a sale leaseback on around 50% of the pan European portfolio offering an investor long term income in a sector currently craved in real estate.
However, the other 50% is linked to land earmarked for speculative developments at which DHL may not wish to commit to a lease but stay flexible depending on whether it wants to lease the space to its customers or ‘grow into’ itself. Depending on the situation, a buyer could be required to provide a ‘top up’ on the price.
According to sources, the portfolio incorporates top logistics locations in Sweden, Finland (Helsinki), Poland, Germany, and Italy.
Experts preferred not to speculate on the value of the package given the uncertainly around the land component.
One advisor said the deal could be of a very significant scale at well over €500 mln even up to €700 mln.
The portfolio is expected to attract some ‘extraordinary pricing’ said one source.
The fact that around 50% of the portfolio offers core real estate income is very appealing.
On the other hand, the structure could discourage certain core buyers from entering the fray and be looked at with keener interest by bidders with an appetite for value-add risk returns. All the locations are good as would be expected from the 3PL firm.
JLL referred PropertyEU to DHL Supply Chain for comment. The Bonn-based company said : ‘We generally do not comment on market speculation, nor do our business partners. As is usual business practice, we constantly review our portfolio of assets, which includes our real estate and properties.’
Clearly, potential buyers will view DHL as having a top credit rating.
Parent company Deutsche Post DHL Group is the world’s leading logistics group, which again grew strongly in the third quarter of the year. It expects to book an annual profit of more than €7.7 bn for 2021. In Q3, its profitable supply chain division saw revenues increase 18.5% to €3.7bn.
The DHL portfolio has hit the market at a time when premiums are being paid for portfolios given low vacancy rates and high occupier demand.
3PL providers differ in their approach to real estate. Some do not want to own freeholds, preferring an asset-lite strategy to focus on the return on capital from their core operational business. 3PLs are recognising real estate in strong locations procured on favourable lease terms is a source of competitive advantage and can be accretive to EBITDA.
But some have become much more ‘hands on’ and are willing to take a development risk so long as they can benefit from potential profit on the upside. DHL is one such 3PL that takes this view, as can be seen from the flexibility it wants to retain over elements of the portfolio for sale.