Merlin Properties said it was pressing ahead with an expansion of its logistics portfolio into selected regional markets as it reported its full-year results last week.
Ismael Clemente, the Spanish Socimi’s CEO, said Merlin is now the ‘Iberian leader and the largest player by square metres’ among logistics landlords in Spain, with the asset class making up 10% of its €12 bn portfolio, as at December 2018, mainly in Barcelona and Madrid.
‘At present logistics represents 10% of our portfolio, however the segment will reach 16%,’ he said. ‘(Our expansion) will be helped by our clients who tell us where they want to be within seven logistics hubs in which we will operate.’
Further details are to be presented at the company’s AGM, but the additional markets will be Valencia, Seville, Zaragoza, the Basque area and Lisbon. Clemente said the company has also ‘started to work with clients on last mile logistics facilities and we have an internal project underway with three of them’.
In response to repeated questions from analysts at the results presentation about Merlin’s 41% level of exposure to retail (23% to shopping centres and 18% to urban high street) the directors said they were in no hurry to sell. ‘We do believe in retail,’ said David Brush, chief investment officer.
He added that four ‘non-core’ retail assets which the group failed to sell last year represent 2.2% of gross asset value.
‘I know some people feel differently but we will be patient. If it represented 15% of the portfolio I would feel differently, but it doesn’t and we can wait for the best execution possible.’
Clemente said €450-€500 mln of assets have been earmarked for disposal within the next four years.
Office rental growth in the existing portfolio was up 6.5% year-on-year. Brush said Barcelona was ‘the clear star’ with 14.1% growth, partly driven by the Torre Glóries refurbishment.
This story first appeared in EuroProperty, PropertyEU's sister publication