A focus on last-mile assets in major European hubs has proved the key to unlocking value for the pan-European urban logistics expert.
Since 2016, Valor has been quietly amassing an over €1 bn pan-European portfolio of prime urban logistics assets, primarily located in the highest barrier-to-entry markets of London and Paris, but also situated across major cities in UK, France and Germany.
As Christian Jamison, managing partner, Valor Real Estate Partners, tells Logistics Watch, assembling an 80-asset portfolio of this nature is no mean feat. But the granular nature of the subsector is part of its appeal, as compiling this kind of portfolio requires a particular kind of local knowledge as well as an understanding of key megatrends.
‘When we launched this strategy a lot of industrial investors were focused on big box,’ notes Jamison. ‘We thought urban infill lacked a pan-European focus. And since we started investing, we have stayed true to our mission.’
The attractiveness of urban infill assets lies in its barriers-to-entry and the shortage of supply. But at a time when last mile services are in greater demander than ever, the availability of industrial land in major cities continues to shrink – particularly in Europe’s most iconic capitals.
‘When you look at London and Paris, they have huge populations and huge traffic problems. Those factors mean that logistics operators need a comprehensive network across the city to function well. At the same time, there’s a huge pressure on alternative uses for industrial land,’ Jamison says.
‘From initiatives like the Olympic Games to housing and infrastructure, last mile assets are battling with other essential resources for space. A lot of former industrial estates have already been eaten up. Our strategy builds on these challenges.’
Valor’s competences in this area have attracted attention. ‘We started our last mile strategy with our own capital, before collaborating with AIG on two funds,’ Jamison notes. ‘More recently, we signed a €1 bn deal with QuadReal.’
Working in partnership with the Canadian investor, Valor has been charged with amassing urban logistics assets in key UK, French and German cities. QuadReal is the majority investor in the JV, which started with initial capital commitments of €440 mln, reaching €1 bn with leverage. Valor, the minority investor, is responsible for sourcing and managing the portfolio. Says Jamison: ‘During the pandemic the occupational market proved to be very resilient, and investors have recognised that logistics is one of the best positioned sectors.’
The venture is Valor’s primary vehicle for now, and sees them also actively scouting for opportunities in Germany.
‘Germany is becoming a bigger part of our investment approach, although it is unlikely to overtake the UK and France,’ he notes. ‘Berlin is less dominant in its local economy than London or Paris and doesn’t have such an extreme supply-demand imbalance or as large deal flow. But it’s a very exciting city, and growing really fast; a lot of that new development is eating into industrial supply.’
2021 will also see a big focus on development as a way of maximising capital returns. There are near term plans to grow the already well-established in-house team, and extend its ESG commitments.
‘In December of last year we completed a first impact loan with Acofi, the Paris-based financial services group,’ Jamison affirms. ‘The terms meant that as our ESG profile improved, our margins went down. We are fully committed to delivering environment and social benefits alongside returns for our investors, and green loans are a good example of this.’