LOGISTICS MARKETS - eveeno ticketing · 14.06.2019 · IVSC -WAVO Global Valuation Conference 2019...

M A R K E T T R E N D S – R E Q U I R E M E N T S – P RO P E RT Y T Y P E S

LOGISTICS MARKETS

LIP INVEST GmbH

Bodo Hollung

Natalie Weber

IVSC-WAVO Global Valuation Conference 2019

June 14, 2019 – Frankfurt

2IVSC-WAVO Global Valuation Conference 2019 Bodo Hollung, Natalie Weber - LIP INVEST GmbH

▪ LIP INVEST GMBH – LIP RESEARCH – HYPZERT SPECIALIST GROUP LOGISTICS

▪ MARKET DEVELOPMENTS IN THE LOGISTICS INDUSTRY

▪ LOGISTICS INDUSTRY AND MARKETS

▪ LOGISTICS REAL ESTATE MARKET GERMANY

▪ REQUIREMENTS FOR LOGISTICS PROPERTIES

▪ CONTACT – DISCLAIMER

CONTENTS


LIP INVEST GMBH

LIP RESEARCH

HYPZERT SPECIALIST GROUP LOGISTICS


▪ Owner-managed company

▪ Exclusive focus on logistics properties

▪ Recognised logistics specialists

Fund and investment solutions

for institutional investors

(domestic and foreign countries)

Independent of financial investors

or brokerage houses

▪ Logistics fund 1 launch in 2018

(investment volume €300m)

▪ Logistics fund 1I launch in 2019

(investment volume €300m)

Inhouse: research, acquisition, asset

management, letting, portfolio and

fund management

LIP INVEST GMBH


LIP RESEARCH

LIP UP TO DATE -LOGISTICS PROPERTIES GERMANY

▪ Quarterly market report

▪ Analysis of investment activities, take-up rate, new construction and return on real estate investments with up-to-date figures for the previous quarter

▪ Outlook based on property for sale as a forecast for the transaction activities in the next quarter

LEC TURES

INDUSTRY ASSOCIATIONS


HYPZERT LOGISTICS SPECIALIST GROUP

▪ Institute of the German finance industry

▪ Certify – set standards

▪ Establishment of the Logistics Specialist Group in 2009 at HypZert GmbH

▪ Pioneer and standard setting

▪ Bodo Hollung as founding member

Study

presented on

the Expo Real

2018

PUBLICATIONS

▪ Sept. 2010: Study “Valuation of Logistics Properties” – 1st edition

▪ Sept. 2013: Study “Valuation of Logistics Properties” – 2nd edition

▪ Sept. 2015: Short study “Valuation of Cold Storage”

▪ Oct. 2016: Short study “Valuation of Transhipment Warehouses” (parcel distribution centres)

▪ Feb. 2018: Updates of the type sheets on different logistics property types

▪ Oct. 2018: Study “Valuation of Logistics Properties” – 3rd edition


MARKET DEVELOPMENTS IN THE LOGISTICS INDUSTRY

vertrauliche Präsentation für Warburg-HIH Invest Real Estate GmbH


GLOBALISATION

▪ Global flows of goods increase the demand for logistics services

▪ Trade conflicts and general cooling of the global economy impact German

exports, growth no longer as strong as in previous years

▪ Exports in 2018 up +2.4% adjusted for price, imports up +3.4%

▪ GDP growth in 2018 of 1.5%, the ninth consecutive year of growth, but lost

momentum

FORECASTS GDP

+3.5% 2019

+3.6% 2020

+0.8% 2019

+1.6% 2020

Reduction of customs

duties, introduction of

standards and norms to

reduce trade barriers,

new Incoterms in 2020

Trade agreements,

e.g. new free trade

agreement between the

EU and Japan as of 1 Feb.

2019

Transparency and efficiency

through block chain

(document management,

tracking & tracing, customs

clearance, payment

processing etc.)Source: IWF Kiel, December 2017

WORLD TRADE 2007 - 2017

total

world trade

Monthly data: seasonally and price-adjusted

advanced

economies

developing and

emerging countries



▪ China joins the WTO in 2001: massive relocation of industrial

production to China or the Asia-Pacific region

▪ BUT: Rising labour costs in China + long and risky supply chains

+ high transport costs

▪ Trend towards nearshoring, especially in Eastern Europe

▪ Rather for technologically more complex production

▪ Faster response to end consumer in the case of volatile demand

RIGHTSHORING – NEARSHORING

TENDENCIES

EFFECTS OF LOGISTICS REAL ESTATE

Increasing demand at

intermodal

locations

Fewer halls with large

storage capacity,

more turnover

Less inventory

required due to

back-shift

Eastern Europe:

▪ Wage costs: 3-4%

→ Rising trend

▪ Transport costs: < 1% Eastern Europe:

▪ Wage costs: 3-4%

→ Rising trend

▪ Transport costs: < 1%

Source: Clean Clothes Campaign, Bearing Point

Short-term relocation to

Vietnam, Laos, Cambodia, India

→ currently still lower wage costs


BELT AND ROAD INITIATIVE (BRI)

Two main transport routes:

▪ Belt: Land route from China via

Central Asia and the Middle East

to Europe

▪ Road: From South China via

Southeast Asia, India, Sri Lanka,

East Africa to Europe

Changes in flows of goods

influence the logistics

attractiveness of locations

Source: Merics

Comprehensive infrastructure

network for exchanging goods

by road, rail or ship between

Asia, Africa and Europe

Investments of

more than

USD

900bn

Includes

in total

900

projects

So far

around

8,000

train rides


Source: Fraunhofer SCS

OUTSOURCING

50 %of the logistics services are

still handled by the shipping

companies themselves

EUR

67bn

market potential

High growth opportunities for

contract logistics and

increasing space requirements

Increasing

concentration

on core

competencies

Increasing

outsourcing

rates

Decreasing

depth of value

creation

SALES VOLUMES IN EUR BN



The population

in Germany is

getting older

and older

Population

forecast

Germany

2030

DEMOGRAPHIC CHANGE

Increasing use

of mobile

devices

(smartphones,

tablets) over

generations

Metropolitan

regions grow

Urbanisation:

Increasing demand for

delivery services

People remain

active for longer

and enjoy

consumption

Digitisation:

progressive development of new consumption

patterns (online shopping, multi-channel, etc.)



1,3 1,6 2,2 3,04,4

6,48,4

10,412,6

15,6

20,2

24,4

28,0

32,0

35,6

39,9

44,2

48,9

53,6

58,5

23,1%

37,5%

36,4%

46,7%45,5%

31,3%

23,8%

21,2%

23,8%

29,5%

20,8%

14,8% 14,3%

11,3% 12,1%10,8% 10,6%

9,6% 9,1%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

(P)

▪ Currently around 10% of total retail sales

▪ Same day delivery, two hour delivery, time slot,

different delivery types

▪ Rising demand for logistics space, new types of

logistics real estate

Quelle: HDE 2019

E-COMMERCE

EUR1bn turnover

requires…

E-Commerce

revenues grow

rapidly

over EUR 50bnin 2018

EUR 1bnin 2000

…about

50,000 – 100,000 sqmlogistics space

Development of online sales in Germany (EUR bn)


1.690 1.730 1.760 1.800 1.8501.950

2.1202.230 2.230 2.180

2.3302.470 2.560

2.6602.780

2.9503.160

3.3503.530

3.7103.910

4.1104.330

0

500

1.000

1.500

2.000

2.500

3.000

3.500

4.000

4.500

5.000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

par

cels

mill

ion

▪ Growing demands for sustainability

▪ Traffic and noise restrictions

▪ Reduction of CO2 emissions

▪ Charging stations for electric vehicles

▪ Crowded cities, growing population,

competition for space

▪ Demand for micro hubs (small

transhipment and storage areas) in

inner-city locations

▪ Challenge for urban planning

Source: KEP-Studie 2018; KE-Consult Marktanalyse und Prognose

E-COMMERCE

Above-average growth in parcel volume to more

than 4.3 billion shipments is expected to

continue until 2022

Continuing strong increase in

parcel volume due to

e-commerce growth

4bnin 2021

3bnin 2016


LOGISTICS INDUSTRY AND MARKETS


LOGISTICS LOCATION GERMANY

▪ Central location, population density, well-developed

infrastructure, one of the most important industrial

nations in the world

▪ Major gateway locations with major seaports and

freight airports

▪ Highest accessibility of the population

Largest and most important logistics

location in Europe

ACCESSIBILITY


LOGISTICS MARKET GERMANY – LOGISTICS TURNOVER

Source: Fraunhofer SCS

The largest economic sectors in Germany in the goods industry by

turnover (2015)

Source: Destatis 2015

100

150

200

250

300

Turnover of the logistics sector in Germany

1995 – 2017 in EUR bn

EUR 267bn

market volume

(2017)

Germany is by far the largest

logistics market in Europe

3rdplace

among the German

economic sectors

Logistics is the third largest

economic sector in Germany after

the automotive industry and trade

with positive forecasts and

sustainable mega trends

3 million

employees

Currently around 3 million

employees in the logistics sector

€ 1

.712bn

Trade

€ 4

38bn

Automotive

€ 2

53bn

Logistics

€ 2

20bn

Engineering

€ 2

10bn

Electronics


LOGISTICS MARKET EUROPE – LOGISTICS TURNOVER

▪ Germany, UK and France are the largest logistics markets in Europe due to their economic strength,

population density, infrastructure and gateway function

▪ The Netherlands and Belgium traditionally have the highest per capita logistics turnover, profiting from

major ARA seaports

▪ Good development in Eastern Europe since EU enlargement - especially in Poland

▪ In other EU countries the logistics market is primarily for supplying their own population and economy

0

50

100

150

200

250

Logistics market size in Europe 2016 – annual turnover in bn EUR

EU AS

LOGISTICS

LOCATION

Quelle: Fraunhofer SCS


Land LPI

Rank

LPI

Score

Customs Infrastruc-

ture

Internatio-

nal

shipments

Logistics

competence

Tracking &

Tracing

Timeliness

Germany 1 4,20 4,09 4,37 3,86 4,31 4,24 4,39

Sweden 2 4,05 4,05 4,24 3,92 3,98 3,88 4,28

Belgium 3 4,04 3,66 3,98 3,99 4,13 4,05 4,41

Austria 4 4,03 3,72 4,18 3,88 4,08 4,09 4,25

Japan 5 4,03 3,99 4,25 3,59 4,09 4,05 4,25

Netherlands 6 3,02 3,92 4,21 3,68 4,09 4,02 4,25

Singapore 7 4,00 3,89 4,06 3,58 4,10 4,08 4,32

Denmark 8 3,99 3,92 3,96 3,53 4,01 4,18 4,41

UK 9 3,99 3,77 4,03 3,67 4,05 4,11 4,33

Finland 10 3,97 3,82 4,00 3,56 3,89 4,32 4,28

LOGISTICS PERFORMANCE – RANKING OF THE WORLD BANK

▪ Logistics sector in Germany achieves

top position in international comparison

▪ Logistics Performance Index

EVALUATION

✓ Customs system and customs clearance

✓ Infrastructure and service quality

✓ International shipping

✓ Logistics competence

✓ Tracking & Tracing

✓ Timeliness, time spans

GERMANY IN

2018 AGAIN IN

1ST PLACE

WORLDWIDE

Source: Weltbank,

Global Rankings

2018


LOGISTICS SPACE IN EUROPE

▪ Enormous concentration of logistics space in Germany

▪ More than 60 million sqm of logistics space and thus more

than twice as much as in the Netherlands on 2nd rank

▪ Considering the comparatively small land area in the

Netherlands and Belgium, the existing logistics space is

very high

Existing logistics

space in Europe

2017

(in million sqm)

63.9

21.2

24.6

22.2

28.9

21.3

19.0

14.7

11.9

Source: JLL 2017


PRIME YIELDS ON LOGISTICS PROPERTIES IN EUROPE

▪ Prime yields continued to fall in 2018 and 2019

▪ Reflects high demand for investment properties

▪ In some countries, yield pressure is expected to continue

despite the low level already reached, also in the

secondary markets

▪ Level in European markets outside Germany increasingly

converges with that in Germany

Source:

BNP Paribas Real Estate

- Research Q4 2018

≤ 5%

5% < x ≤ 6%

6% < x ≤ 7%

> 7%

Net prime yields

6,255,30

LisbonMadrid

6,15

Valencia

5,30

Barcelona

4,75

4,75

Marseille

Toulouse

4,75

4,75

4,75

4,00

5,10

Dublin

London

Lyon

Lille

Paris

5,75

4,95 4,05

4,05

4,05

4,05

Brussels

Rotterdam Düsseldorf Berlin

Munich

Frankfurt

5,25

5,50

Milan

Rome

5,407,00

7,75

9,25

8,25

9,50

5,40

5,40

6,25

7,75

7,75

7,75

5,5011,2

11,0

5,75

5,25

5,35

5,75

5,00

Athens

Bucharest

Belgrade

Vienna

Prague

Poznan

Warsaw

Katowice

Bratislava

Budapest

Moscow

Vilnius

Riga

Tallin

St. Petersburg

Helsinki

Oslo

Stockholm

Gothenburg

Copenhagen


LOGISTICS REAL ESTATE MARKET GERMANY


INVESTMENT MARKET

DEALS:

EUR

480m

Acquisition of Alpha Industrial portfolio by

Frasers Property

EUR

450mBlackstone acquires 10 logistics properties

in GE and PL from Hines Global REIT

EUR

450mFrasers sells Geneba portfolio with 17

German properties to its own REIT

EUR

93mEuropa Capital and Garbe buy logistics

portfolio in GE and AT with 6 properties

EUR

-mJV Kwasa Goodman Germany acquires

new buildings for BMW and Metro

EUR

140mInvesco acquires 2 logistics properties from

Alcaro in Berlin and Cologne

0

1

2

3

4

5

6

7

8

9

▪ Investment volume of around EUR 6.8bn in 2018

▪ Around 11% of total commercial transaction

volume

▪ Share of portfolio transactions and M&A at just

under 60%

▪ Around 50% generated by international investors,

especially from Asia

Transaction volume logistics real estate

2007 – 2018 in EUR bn


-1,00%

0,00%

1,00%

2,00%

3,00%

4,00%

5,00%

6,00%

7,00%

8,00%

0

1.000

2.000

3.000

4.000

5.000

6.000

7.000

8.000

9.000

10.000

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Q1 Q2

Q3 Q4

Ø Prime yield top 5 logistics (%) Ø Prime yield top 5 office (%)

10 year government bond

LOGISTICS REAL ESTATE –YIELD DEVELOPMENT

▪ Yield compression as in all asset classes

▪ High international interest in German


▪ Demand has exceeded supply for years

▪ Yield spread to other asset classes

approx. 125-175 bps

▪ Cash return remains high

▪ Attractive investments in good locations

also possible for higher yields

Source: CBRE Research, Q2 2018

Transaction volume

(in EUR million)

Net initial yield /

yield government bond


LOGISTICS PROPERTY MARKET GERMANY 2018

▪ Space take-up in 2018 reaches record level of 7.0m sqm

▪ Owner-occupier share is one third

▪ Share of new buildings over 60%

▪ Hardly any modern space available at established logistics locations,

majority of new logistics projects being realised outside the Big 5

▪ Slight increase in speculative new construction, but still at low level

0

1

2

3

4

5

6

7

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Eigennutzer Vermietungenowner-occupiers

Space take-up in Germany 2008 – 2018 in m sqm

Regional

distribution of

new buildings

Q1 2019

Source: Logivestleases


≤ 1 year

2%2 years

4%

3 years

23%

4 years

7%5 years

54%

7 years

2%

≥ 10 years

8%

RENTAL PRICES & LEASE TERMS

▪ The rent levels can vary considerably

▪ Differences result primarily from the scarcity of land (land prices)

▪ At micro level, the differences depend on the quality of the property

▪ In some regions, increases in rental prices of up to 10%, e.g. Berlin, Munich

▪ In future, further increase in rental prices expected, due to the continuing high

demand along with the lack of space

▪ More than 80% of the lease terms

are between 3 - 5 years, only 8% 10

years or longer

▪ Renewal rate of expiring leases at

around 90%

Source: JLL 2018

2

3

4

5

6

7

8

in EUR/sqm


REQUIREMENTS FOR LOGISTICS PROPERTIES


LOCATION CRITERIA

New

Buildings

Automotive

Logistics

2018

Source: Logivest

PROXIMITY IS BECOMING MORE AND MORE

IMPORTANT

▪ Proximity to production sites (supply logistics)

▪ Proximity to highly populated regions (trade,

supply)

▪ Consideration of population development

▪ Proximity to metropolitan areas (large cities)

▪ Import/export locations (ports, airports)

▪ Locations with outstanding infrastructure

(motorway junctions, international transport

routes) for nation-wide or international

distribution

▪ Outskirts for CEP services or inner-city for

fast customer supply

▪ Locations as part of a supply network (DHL,

Hermes etc.)


LOCATION CRITERIA

▪ Understanding of user requirements

▪ Center of Gravity

▪ Direct motorway connection

▪ Near GVZ (freight terminal), cargo airport up to 100 km distance

▪ Low noise restrictions

▪ Sufficient distance to residential buildings

▪ Land availability

▪ Extension options

Understanding


as part of the supply

chain

Raw material

supplier level

Supplier level End product

production level

Distribution level Consumer level

Flow of goods

Source: Own illustration


ASSET CRITERIA

▪ Different types of real estate for different uses

▪ Various access options (loading docks)

▪ Consideration of higher electricity demand in the

future

▪ Provision of large internet bandwidth

▪ Sustainable building equipment (regenerative

heating and power supply, photovoltaics)

▪ Sensor-controlled LED illumination

▪ Vertical or horizontal window strips

▪ Large support column grid (24 x 12 m)

▪ Floor loading capacity at least 5 t

▪ Shelving systems (2 or more levels)

▪ Spacious parking and traffic areas

▪ Charging stations for electric vehicles


VALUATION OF LOGISTICS PROPERTIES

▪ Import / export

logistics

▪ Production supply

▪ Fulfilment

▪ Regional supply

▪ Central supply

▪ Parcel handling

Market

▪ Supply

▪ Competition

▪ Demand

▪ Business

environment

▪ Economic cycle

▪ Interest rates

Location

▪ Macro location

▪ Micro location

▪ Area served

▪ Business

development

support / logistics

initiative

Building / land

▪ Building law

▪ Layout

▪ Noise protection

▪ Contamination

▪ Fire protection

▪ Facilities

Property types

▪ Production

warehouse

▪ Distribution centre

▪ Fulfilment centre

▪ Transhipment

centre

▪ Parcel distribution

centre

▪ Cold store

warehouse

Valuation of a logistics property

Function

▪ Type of use

▪ Credit rating

▪ Lease term

▪ Options

▪ Rent

▪ Operating costs

▪ Indexation

User / tenant


PRODUCTION WAREHOUSE

Building type Production warehouse

Production supplyFunction

Features ▪ Short distance from production

site (25 km max)

▪ Warehouse height up to 10 m

(block storage)

▪ Ground-level gates

▪ Low number of gates

▪ Roofed access

▪ Partly with crane system


DISTRIBUTION CENTRE

Building type Distribution centre

Central / regional supplyFunction

Features ▪ Warehouse heights between 10 to

12 m

▪ Partly mezzanines

▪ Ramp gates

▪ Number of loading gates > 1/1,000

sqm

▪ At least one ground-level gate

▪ Yard with > 35 m loading depth /

marshalling space


COLD STORE WAREHOUSE

Building type Refrigerated warehouse

Cold chain logisticsFunction

Features ▪ Higher demands to insulation

standard

▪ Heated floor slap (anti-freeze

protection)

▪ Special fire protection

▪ Reduction of fire load

▪ Cold covered loading zone

▪ Refrigeration technology


FULFILMENT CENTRE

Building type Fulfilment centre

Central supply

(E-commerce logistics)Function

Features ▪ Large logistics spaces often up to

100,000 sqm

▪ Ramp gates

▪ Large heights, sometimes > 14 m

▪ Partly mezzanines

▪ Larger communal rooms

▪ Large percentage of offices


PARCEL CENTRE

Building type Parcel centre

Parcel handlingFunction

Features ▪ Often U- or H-shaped building

layout

▪ Usually with automated sorting

and conveyor lines

▪ Low height and depth

▪ Very high number of gates

▪ Loading access on two or more

sides

▪ High demand for parking space

for trucks, sprinter vans and swap

trailers


PARCEL DISTRIBUTION CENTRE

Building type Parcel distribution centre

Parcel distributionFunction

Features ▪ Free of columns for installing

sorting facilities

▪ Low warehouse depth

▪ Low warehouse height between

5.5 and 7.5 m to the underside of

the ceiling beam

▪ Loading access from two sides

▪ High number of gates (sprinter van

gates)

▪ Large marshalling space


TRANSHIPMENT CENTRE

Building type Transhipment centre

Cargo handlingFunction

Features ▪ Distribution of goods from long-

distance and short-haul transport

(or vice versa)

▪ Access from several sides for fast

handling

▪ High number of loading gates (>

1/250 sqm)

▪ Low warehouse height (< 8 m to

the ceiling beam)

▪ Low warehouse depth

▪ Generous marshalling space


CONTACT

DISCLAIMER


Bodo Hollung MRICS

Managing Partner

Rosental 6

80331 München

Phone: +49 89 2421 0123-4

Mobile: +49 162 63 20000

[email protected]

www.lip-invest.com

Natalie Weber (M.A.)

Head of Logistics & Research

Rosental 6

80331 München

Phone: +49 89 2421 0123-7

Mobile: +49 162 166 0010

[email protected]

www.lip-invest.com

CONTACT


This material has been created for your personal use and for information purposes only. It has not been prepared with the intention of giving

legal or tax advice. We are not liable for the completeness, reliability and correctness of the material as all other information presented to

you. The accuracy of the data contained in this presentation based on published information has been assumed but not verified by us. It is not

a prospectus and does not constitute a recommendation or offer to buy or sell securities/fund units. It reflects our views and may be

changed without prior notice, but without our obligation to update it.

The material is to be treated confidentially. It is made available as a basis for discussion. The illustrations and/or examples of real estate

investments contained in this presentation serve only to present the logistics and logistics real estate market transparently and to illustrate

possible fund or portfolio compositions. They are in no way to be understood as a guarantee for a future fund or portfolio composition.

Please note that past performance is not necessarily indicative of future performance and investors may not recover their original investment

amount. Past performance is no guarantee for future developments. Statements in this document that are not historical facts are forward-

looking statements. These forward-looking statements are based on current expectations, estimates and forecasts regarding the industries

and markets in which I operate. They are subject to certain risks and uncertainties that could ultimately cause actual results to differ

materially. We must expressly exclude any responsibility for the occurrence of the assumptions. This document may not be reproduced,

distributed or published without our written consent - for any purpose whatsoever. The investment opportunities described in this

publication may be unsuitable or inadmissible for sale in various jurisdictions or for certain investor groups.

The presentation including all its parts is protected by copyright. Any use outside the narrow limits of copyright law without the consent of

LIP Invest GmbH is inadmissible and punishable by law. The author/the authors have created this work with great care, but assume no

guarantee for the topicality, correctness, completeness and quality.

DISCLAIMER

LOGISTICS MARKETS - eveeno ticketing · 14.06.2019 · IVSC -WAVO Global Valuation Conference 2019...

Documents

Transcript of LOGISTICS MARKETS - eveeno ticketing · 14.06.2019 · IVSC -WAVO Global Valuation Conference 2019...