As planned, LIP Invest, leading provider of special real estate funds in the asset class of logistics real estate in Germany, has completed the first closing for the newly launched fund "LIP Real Estate Investment Fund - Logistics Germany IV" with 85 million euros at the end of 2021.
Due to the considerable interest of investors, the equity capital has now grown to 135 million euros. Further investors are planning subscriptions of 70 million euros at short notice. With a capital target of 250 million euros, around 50 million euros are still open for subscriptions for investors from insurance companies, pension schemes, pension funds, banks, savings banks, and foundations.
From a current pipeline of around 400 million euros, the fund has already been able to acquire 4 properties and secured 4 more through an exclusivity agreement. 100 percent of capital commitments made by investors of the 1st closing have already been drawn down.
With a moderate use of debt capital, the LIP fund management plans a target volume of around 500 million euros. Within the framework of a core strategy, the fund – like its three predecessors – focuses exclusively on Germany as an investment location, by far the largest and least volatile logistics market in Europe. The focus of the property acquisitions is on high-quality existing buildings as well as new buildings in established and enduring locations for logistics-related uses with a long-term demand for space.
In building the portfolio, the fund plans to diversify broadly in the segments of user groups, property types, property volumes, tenants, lease terms, locations and financing partners. In particular, aspects of environmental compatibility, social responsibility and corporate governance will be taken into account. LIP has been focusing on properties with high building standards for years as part of its ESG strategy. The logistics properties acquired should therefore be structurally prepared for the subsequent installation of photovoltaic systems and, if possible, have suitable certifications for assessing environmentally friendly construction. In addition, a classification of the fund within the meaning of Article 8 of the Disclosure Regulation is planned.
“With the experiences gained from the pandemic and the effects of the Ukraine war already becoming apparent, logistics and thus logistics properties are becoming even more important. Disrupted supply chains and the vulnerability of just-in-time deliveries will lead to a rethink across the industry. Supply chains are increasingly being developed into supply chain networks. Warehouse management and inventory management will be increasingly in focus in the future to avoid production losses due to missing supplier items. The previous demands for the relocation of production, the so-called nearshoring, are now gaining a completely new meaning. For in Russia alone, there are currently located more than 1,300 suppliers to German industry, and more than 300 in the Ukraine. As a result, the demand for logistics will once again increase significantly – above and beyond the high demand from the booming online trade. Investments in logistics real estate will therefore continue to be an attractive investment with a secure cash flow and the opportunity for rent increases,” explains Natalie Weber, authorized signatory and head of fund management at LIP Invest.
More than 50 investors – including numerous multiple subscribers – have invested in the 4 LIP logistics property funds with a volume of around 900 million euros. With an investment volume of around 1.5 billion euros, the LIP logistics real estate portfolio now consists of over 50 properties with a total rental area of 1.1 million square meters and rental income of around 60 million euros. The occupancy rate is 100 percent, confirming the good selection of the properties acquired.
“With further capital commitments expected in the short term, we will reach the one billion euros equity before the first half of 2022. More and more institutional investors are relying on us as experts in the industry, who are the only asset managers to focus exclusively on the logistics real estate asset class and only on Germany as a location. Investors appreciate the close and personal relationship with us. With our large network, our proximity to the market, even in Corona times, and our reliability and speed, we are always able, despite the great competition, to secure suitable properties with a high off-market share for our funds and thus our investors' request for a quick capital call,” says Sebastian Betz, Managing Director of LIP. "In the case of real estate such as logistics centres, which require considerable specialist knowledge, more and more investors are now turning to specialists, so-called investment boutiques, instead of generalists, such as the large German and international fund houses," Betz continues.