Boreal IM and Cadillac Fairview/Ontario Teachers’ Pension Plan JV acquires 200,000 sq.m logistics portfolio in Italian debut

Boreal IM and Cadillac Fairview/Ontario Teachers’ Pension Plan JV acquires 200,000 sq.m logistics portfolio in Italian debut

The Cadillac Fairview/Ontario Teachers’ Pension Plan (OTPP) & Boreal IM joint venture (the “JV”) has completed its first transaction in Italy, the purchase of a portfolio that includes four fully-let and long-lease operational warehouses totalling 198,000 sq.m (2,127,000 sq.ft) and two development plots.  The assets are primarily located in the Greater Milan region and all within the target market of the north of Italy.

The portfolio was acquired from Blackstone-sponsored closed-end real estate funds managed by Kryalos SGR, and the transaction was carried out in a newly established fund managed on behalf of the JV, also by Kryalos SGR. The expansion into Italy follows acquisitions by the JV in the UK, the Netherlands, France and Spain over the past 18 months.

The standing assets include:

• In Pioltello, east of Milan and near Linate airport, two warehouses of around 57,000 sq.m (612,000 sq.ft) that are fully let to a global contract logistics provider as their Italian headquarters. The warehouses are on a 152,000 sq.m (1,636,000 sq.ft.) site which benefits from a low coverage of only 33% and direct access to a railway line connecting Milan to northern Europe.

• In Villanterio, south of Milan, a 55,000 sq.m (587,000 sq.ft) warehouse that was constructed in three phases – 2013, 2016 and 2020 – has strong ESG credentials, including LEED Gold certification, and benefits from a licence allowing the storage of hazardous goods. The asset is fully let to a French multinational leader in the cosmetic industry and serves the national distribution.

• In Pozzaglio, between Milan and Bologna near Cremona, a 29,000 sq.m (307,000 sq.ft.) well-maintained warehouse originally constructed in 2011. The asset is fully let to an Italian chocolate manufacturer.

• In Monticelli, south of Milan, a warehouse constructed in 2008 with a leasable area of 58,000 sq.m (621,000 sq.ft). Fully let to an American multinational whitegoods manufacturer, it is currently undergoing approximately €1m of capex works to improve the asset, including installing LEDs throughout.

The development opportunities include:

• In Monticelli, adjacent to asset just mentioned, a land plot ready to be developed into a 55,000 sq.m (589,000 sq.ft) BREEAM Excellent warehouse.

• In San Bellino, between Venice and Bologna, a development land plot with a 44,000 sq.m (474,000 sq.ft) buildable area. The asset includes a further site currently let to a worldwide leading e-commerce company as on-ground truck and car parking, serving their neighbouring multistorey warehouse.

All of the assets and sites benefit from easy access to the main highways, including the A1 which connects northern and southern Italy (Villanterio, Monticelli); the E70 connecting Turin with Venice (Monticelli and Pozzaglio); and the A13 that runs from Padua to Bologna (San Bellino).

Cadillac Fairview, Boreal and Kryalos are dedicated to implementing sustainable practices and ESG initiatives across the portfolio on behalf of the JV. CRREM analyses will be conducted on the assets in addition to the exploration of PV installation. Boreal will also implement energy performance improvements such as LED lighting and pursue BREEAM in-use certification.

The two developments, which will start in the near future, will target minimal embodied and operational carbon and BREEAM Excellent certification.

Cadillac Fairview, Boreal and Kryalos were advised by Linklaters, JLL and PwC. On the sell side, CBRE, DILS, Gattai, BNP Real Estate Property Management and 5Lex were retained as advisors, while Di Tanno Associati assisted in relation to regulatory and corporate aspects.

Nikos Koulouras, Partner at Boreal IM, commented: “We are extremely happy to have completed our first acquisition in Italy, especially as the portfolio is very well located, fully let and offers development potential to capture growing demand for logistics space. This portfolio gives us immediate scale in Italy and demonstrates our commitment to finding and creating value through market insight and proactive asset management. Having established the Kryalos SGR JV in Italy, we now look forward to growing the portfolio further.”

Jenny Hammarlund, Executive Vice President, Investments, Cadillac Fairview, said: “The JV has entered the Italian market with conviction, having carried out detailed diligence and we are confident about the potential of the northern Italian logistics market. We are now in five of our six target markets, giving us diversified exposure to outsized returns in the European logistics market. We are very pleased to be continuing to build the portfolio at speed, particularly in this more challenging market.”

Paolo Bottelli, Founder & CEO of Kryalos SGR, commented: “We are glad to include the Boreal-Cadillac Fairview JV among our investors and we look forward to working side by side to implement our joint strategy in the northern Italian logistics market, where we have been a market leader for years. Kryalos’ strategy is to acquire assets with a view to building improvements and increased energy efficiency in order to cater to the evolving demands of occupiers. This transaction proves the value of that approach, and we are committed to continuing to look for further opportunities to do this with the JV.”