12 March 2018

Global expands and diversifies its real estate holdings to include Western Europe by acquiring a property in the logistics industry

Following the success of its UK National Commercial Real Estate Program, Global has recently launched the European Commercial Real Estate Program by acquiring, on behalf of its clients, a high-quality warehouse facility strategically located in West Germany. The property is let to ATU, a leading German automotive spare parts and service retailer with more than 600 outlets through-out Germany, with inflation-linked rental income and a 15-year unexpired lease term.

The property consists of a warehousing facility spanning over 100 thousand square meters, built to high quality specifications, to cater to the tenant’s requirements. The asset is strategically located in Germany’s core logistics hub, part of Europe’s key logistical corridor extending from Northern Italy to the UK. The property yields over 10% annually and the investment team targets an overall return of 12% over the investment period based on the investment team's strategy.


On this occasion, Rasha A. Al Qenaei, Executive Vice President and Head of Wealth Management, said: "Together with our Real Estate Asset Management team, we have been able to meet the requirements of our clients with real estate investment in Germany that gives them recurring income/yield accompanied with low volatility. We have built an excellent track record in the commercial real estate sector providing clients 9% annual income with quarterly distribution."


Head of Real Estate Asset Management, Nasser Al-Khaled, commented: "Following the successful acquisition and management of many commercial properties in the United Kingdom on behalf of clients, we have advanced to the second phase of our business model and strategy by expanding our asset management services to cover Western Europe and the United States in order to provide diverse opportunities for our client and to be able to distribute risks geographically as well as by currency, in line with their investment strategies.”


Germany is Europe's largest economy, with GDP continuing to grow at a higher rate than its counterparts. The unemployment rate fell from 11.5% in 2005 to 5.5% in 2015, the lowest rate in comparison with other European Union countries. Although there was a significant drop in gross national income per capita during the 2008 financial crisis, its recovery was faster than its peers thanks to its flexible economy. The stable economic and legal framework in Germany continues to attract both domestic and foreign investors as well as those looking for secure and stable sources of income.


Underpinned by improving economic conditions and Germany’s excellent infrastructure and central location in Europe, the German logistics market continuous to play a leading role in Europe. Moreover, German logistics investment volumes have recorded a new high, reaching Euro4.7 billion in 2016, exceeding previous record the year before, and the overall 5-year average. The strong demand for logistics properties by national and international investors and a short supply of newly built properties has led to a continued fall in net initial yields.


In late 2016, A.T.U. was acquired by Mobivia, a French conglomerate, with presence throughout Europe, that specializes in the sales of automotive parts as well as repairs. This acquisition marked a strategic partnership for Mobivia, allowing it entry into the German market, and creating the largest European automotive player in the industry. Additionally, Michelin Tires, the French tire industry leader, has recently announced that it has acquired a 20 per cent stake in ATU and confirming its cooperation with its partners in the development and growth of the company's automotive services business in Germany. This announcement may contribute to ATU's financial and competitive position thus adding value to the property.


Al-Khaled concluded: "Despite the global challenges witnessed in 2017, we were able to deliver exceptional results to our investors in our UK program, including an excellent exit; and we are confident that we will be able to replicate our successful experience in the UK in our expansion through this newly launched European program; and will continue to strive to deliver both successful exits and expansion into other markets within 2018."

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