MR 2018

78

Copenhagen Property Market Report 2018

Key transactions

vacancy rates and stable or uptrending rent levels in the occupational market. Furthermore, even when factoring in the predicted slight decline in net initial yields, prime industrial and logistics properties let to strong-covenant tenants on long leases will continue to produce attractive returns compared to e.g. a yield requirement of 4.00% or lower on prime office properties. Generally speaking, office assets are considered more attractive and secure than industrial/logistics assets, but if a top-modern, well- located industrial/logistics asset is offered for sale at 100% occupancy and with a strong- covenant tenant on a long lease, the current 175 bp gap between the prime industrial yield versus the prime office yield seems excessive; an investor will still make a highly competitive investment at a yield requirement of 5.75%. Overall, we therefore foresee sustained activity in the industrial/logistics investment property market.

At start-2018, the mounting demand for sale & leaseback transactions was clearly underpinned by M7 Real Estate’s acquisition of ten industrial/ logistics assets with a total volume of DKK 520m. Situated in Greater Copenhagen, Funen and the Triangle Region, the majority of the properties were sold in a sale & leaseback transaction involving a weighted leaseback period of six years. In 2017, key transactions included M7 Real Estate’s portfolio sale of 25 secondary, mixed-use industrial/ logistics facilities to Blackstone at a price of approximately DKK 900m, reflecting an estimated net initial yield of almost 9.00%. As part of the transaction, M7 retained the asset management of the portfolio. The year also saw the Lemvigh- Müller sale & leaseback transaction, involving the sale of three assets in Køge, Odense and Kolding to MEP Industrial Centre at a price of DKK 441m, reflecting a weighted yield requirement of just below 7.00%.

Also in a sale & leaseback transaction, NREP acquired a Køge logistics facility of 31,000 sqm with future expansion by 12,145 sqm space, with DKI Logistics as tenant.

Ullsvej 5, Køge