M7 Real Estate, newly acquired by Oxford Properties, bets on UK retail warehouses because they will play an important role in the omnichannel retail landscape, especially for click and collect and last mile logistics.
Retail warehouses are ‘one of the most interesting UK real estate asset classes at the moment, especially given the current pricing dislocation in this segment, as the rental arbitrage between last mile logistics and retail warehousing narrows’, said David Ebbrell, CEO, M7. ‘We are of the view that demand is only set to grow’.
M7 Real Estate, the pan-European investor and asset manager, has assembled just over a £300 million portfolio of 19 retail warehouses following the full deployment of capital raised across its M7 Box+ I and M7 Box+ II funds.
Both funds, which were launched in H2 2020, focus on carefully selected UK retail warehouses with potential for future rental and capital growth, through asset management and an anticipated re-pricing of the asset class as the logistics function of these properties in the last mile delivery chain grows.
A total of £130 million equity was raised across the two funds, derived from a mix of global high net worth, family office and institutional investors. The portfolios are spread across the UK, providing income and value diversification by both tenant and geography.
‘The portfolio we have managed to assemble over a relatively short timeframe holds significant opportunity and by deploying our asset management skills we believe that we will deliver attractive income and capital appreciation for our investors,’ said Ebbrell.
Earlier this week Oxford Properties Group announced it had exchanged on the acquisition of M7 in order to accelerate its deployment of capital into European logistics. M7 now invests across a variety of asset classes and has €4 billion AUM, but it was formed in 2007 as a specialist in light industrial and urban logistics, which remains its largest sector.
The investment is in line with Oxford’s global capital allocation strategy ,which has seen it both enter new geographic markets and increase its weighting to the logistics, multifamily and life sciences sectors. The company intends to deploy £3 billion of capital into the European logistics sector and the acquisition of M7 gives it immediate scale to do so.
‘The acquisition provides Oxford with a specialist asset and investment management platform which will be transformational in its ability to accelerate its deployment of capital into multi-let industrial and urban logistics across Europe’, said Jo McNamara, Executive Vice President, Europe, Oxford Properties. ‘Through M7, led by a highly ambitious and entrepreneurial management team with deep-rooted expertise in the sector, we intend to significantly expand and accelerate our investment in this asset class across Europe’.
The acquisition is conditional on receipt of regulatory approval, with completion expected in H1 this year. M7 will continue to operate as a standalone business under the current leadership team led by Ebbrell and Richard Croft.