KKR and Palm Capital to Acquire Prime Last-Mile Logistics Asset in Denmark

Rhea-AI Summary

KKR, in partnership with Palm Capital, has acquired a prime last-mile logistics asset in Greater Copenhagen from Catena. The asset includes 47,000 sqm of warehouse and office space, hosting long-term tenant Nemlig.com. This logistics park benefits from excellent infrastructure, including proximity to the upcoming light rail system in 2025. The acquisition is part of KKR’s strategy to expand in Nordic real estate, leveraging the supply-constrained industrial market. This deal follows KKR’s recent investments in Finland and Sweden, reinforcing their thematic investment strategies in industrial and logistics assets.

Positive

• Acquisition of prime 47,000 sqm logistics asset in Greater Copenhagen.
• Strategic location with long-term tenant Nemlig.com, Denmark's largest online grocery provider.
• Potential for further development and asset management improvements.
• Expands KKR's footprint in the competitive Nordic real estate market.
• Leverages supply-constrained industrial market for growth opportunities.

Negative

• Dependence on the completion of the new light rail system in 2025.

Insights

Real Estate Market Analyst

KKR and Palm Capital’s acquisition of a prime last-mile logistics asset in Greater Copenhagen reflects a strategic move in a highly competitive market. The logistics asset’s location, integrated with the new light rail system set for completion in 2025, is pivotal. This connectivity enhances accessibility, making the asset more attractive to current and future tenants.

From a real estate perspective, the scarcity of logistics spaces in urban areas and the shift from industrial to residential usage amplify the potential value of this acquisition. The facility’s current tenant, Nemlig.com, which is Denmark’s largest direct-to-consumer online grocery provider, signifies stability and potential for sustained revenue streams. Furthermore, the prospect of additional warehouse facilities and energy improvements could enhance the asset’s value and appeal, aligning with sustainable investment trends.

For investors, this acquisition underscores KKR's continued focus on value-add strategies in Western Europe, particularly in the Nordic region. Historically, 45% of property value appreciation in urban logistics comes from development initiatives, positioning this investment for notable growth.

Financial Analyst

From a financial standpoint, this acquisition is significant for several reasons. The logistics asset’s long-term tenant, Nemlig.com, provides a steady income stream, reducing rental income volatility. Notably, the market for logistics properties, especially last-mile facilities in urban areas, has been robust. In recent years, rental growth in the European logistics sector has outpaced other real estate asset classes, driven by e-commerce expansion and supply chain reconfigurations.

KKR’s strategy of value-add and opportunistic investments indicates they are likely to implement capital improvements to boost property values. Historically, such improvements can yield a return on investment of around 8-12%. Additionally, the partnership with Palm Capital, which has a successful track record in similar assets, presents a synergistic advantage. This collaboration may streamline asset management initiatives, enhancing operational efficiencies and financial performance.

Investors should note that the prime location and existing infrastructure improvements project a favorable long-term outlook. However, there is an inherent risk regarding market fluctuations and the successful completion of the proposed improvements.

Market Research Analyst

This acquisition taps into the growing demand for urban logistics facilities, driven by e-commerce growth and the pressing need for efficient supply chains. In Greater Copenhagen, infrastructure developments, such as the new light rail system, increase the strategic value of such assets. Market data suggests that proximity to key transport links can enhance property values by up to 15% over similar assets not as well-positioned.

Moreover, the Danish market is characterized by low vacancy rates in industrial real estate, currently around 2%, indicating strong demand and limited supply. This environment supports rental growth and stable occupancy, making the investment resilient against market downturns. The asset’s current use by Nemlig.com exemplifies its alignment with evolving market needs, particularly in online grocery delivery, which has seen a 30% annual growth recently.

For retail investors, this acquisition serves as a case study in strategic site selection within urban logistics. The future potential for further development and asset management initiatives aligns with broader industry trends towards sustainable and high-efficiency logistics solutions.

Investment in freehold logistics asset with strong development potential and asset management initiatives in Greater Copenhagen

STOCKHOLM--(BUSINESS WIRE)-- KKR, a leading global investment firm, and Palm Capital, the pan-European real estate private equity specialist today announced the acquisition of a prime last-mile logistics asset in Greater Copenhagen, Denmark, from Catena, the Sweden-based leading logistics developer.

The park comprises 47,000 sqm of warehouse and office space and hosts long-term tenant Nemlig.com, the country’s largest provider of direct-to-consumer online food and grocery delivery. The logistics asset is located in Greater Copenhagen and surrounded by excellent infrastructure, uniquely positioned on the city’s new light rail system, which is due to be completed in 2025. In a supply-constrained industrial real estate market with strong growth potential, the asset offers significant upside with potential for further development, including additional warehouse facilities and various asset management initiatives such as energy and asset improvements together with the tenant.

Alexander Thams, Director and Head of Nordics Real Estate for KKR, said: “We are delighted to announce KKR’s acquisition of this prime last-mile logistics asset, building on our ambitions in Nordic real estate. Copenhagen is a highly competitive market, and it’s rare to find such quality assets in urban locations. The transaction is our second this year in Denmark and follows our recent investments in Finland and Sweden. Industrial and logistic assets remain central to KKR’s overall real estate strategy, particularly given the shortage of supply that has emerged due to the increasing number of industrial to residential conversions.”

Reda Khatim, Managing Partner of Palm Capital, said: “We are excited to strengthen our presence in Scandinavia through this attractive off market acquisition. We are delighted to build upon our successful track record in Copenhagen including through our previous ownership of last mile assets at Copenhagen’s airport. Additionally, this investment in Denmark demonstrates the increased breadth of our high conviction and thematic based investment strategies alongside major institutional partners such as KKR.”

The transaction builds on KKR’s strong track record in industrial real estate across Europe and is another example of KKR’s continued focus on the Nordic region, a key growth market for KKR’s European Real Estate platform. KKR’s recent Nordic Real Estate investments include the acquisition of a high-quality rental residential portfolio in Finland, a Purpose-Built Student Accommodation asset (PBSA) in Copenhagen, and a prime last-mile logistics property in Stockholm.

KKR is making the acquisition through its strategy focused on value-add and opportunistic real estate investments in Western Europe.

About KKR

KKR is a leading global investment firm that offers alternative asset management as well as capital markets and insurance solutions. KKR aims to generate attractive investment returns by following a patient and disciplined investment approach, employing world-class people, and supporting growth in its portfolio companies and communities. KKR sponsors investment funds that invest in private equity, credit and real assets and has strategic partners that manage hedge funds. KKR’s insurance subsidiaries offer retirement, life and reinsurance products under the management of Global Atlantic Financial Group. References to KKR’s investments may include the activities of its sponsored funds and insurance subsidiaries. For additional information about KKR & Co. Inc. (NYSE: KKR), please visit KKRs website at www.kkr.com. For additional information about Global Atlantic Financial Group, please visit Global Atlantic Financial Group’s website at www.globalatlantic.com.

About Palm Capital

Palm Capital is a leading pan-European real estate investment and asset manager. It is headquartered in London, with local presence in Dublin, Madrid and Munich. Palm Capital currently manages approximately €1.5 billion of commercial real estate in the UK, Ireland and Continental Europe across several high-conviction investment strategies and multiple asset classes.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240712412862/en/

KKR: UK

Alastair Elwen / Jack Shelley

FGS Global

+44 20 7251 3801

KKR-LON@fgsglobal.com



KKR: Nordics

Ludvig Gauffin

Fogel & Partners

+46 70 222 60 30

kkr@fogelpartners.se

Source: KKR

FAQ

What asset did KKR and Palm Capital acquire in Denmark?

KKR and Palm Capital acquired a 47,000 sqm last-mile logistics asset in Greater Copenhagen from Catena.

Who is the long-term tenant of the acquired logistics asset?

Nemlig.com, Denmark’s largest provider of direct-to-consumer online food and grocery delivery, is the long-term tenant.

What is the strategic importance of the acquired asset for KKR?

The asset offers significant development potential and aligns with KKR’s strategy to expand in the Nordic real estate market.

When is the new light rail system in Greater Copenhagen expected to be completed?

The new light rail system in Greater Copenhagen is expected to be completed in 2025.

How does the acquisition reflect KKR's investment strategy?

The acquisition reflects KKR's focus on value-add and opportunistic real estate investments, particularly in industrial and logistics assets in Western Europe.