CEO Interview: Frank Pörschke – ‘We’re in it for the long run’

P3 Logistic Parks’ new CEO Frank Pörschke tells Paul Strohm why he is not phased by taking the reins at a time when the sector’s boom might be seen as being short-lived. 

Being hired to lead a specialised logistics real estate investment and development company at the present time could produce mixed emotions. 

On one hand, given the unprecedented demand for the sector from both occupiers and investors, what could possibly go wrong? On the other hand, the competition among investors for both income-producing assets and development sites has become so extreme that the opportunity to make your mark could be quite limited. Furthermore, a pure-play logistics/industrial property business has no option but to focus elsewhere until things calm down again.

Such might have been concerns for property veteran Frank Pörschke when, in March 2021, Prague-headquartered logistics/industrial property specialist P3 Logistic Parks hired him as its new CEO. 

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Pörschke, whose CV includes a seven-year spell at JLL where he was president of EMEA markets, and lengthy periods at Eurohypo and Commerz Real – he was CEO in both cases – was and is unphased by the challenge.

“The advantage of the sector is that there is structural growth and so over the next years we will see market demand growing,” he says. “Growth comes from e-retailers who will continue to grow in all markets. Even though they are at a more mature stage than they used to be three to five years ago, the pandemic has shown that they can accelerate their growth and their structural share.” 

Demand for logistics has also scaled up in the manufacturing sector. “The pandemic has shown that the delivery chain has some weaknesses and you need some form of buffer. If companies want to create more buffers, they need warehouse space, and that contributes to the positive development of the market. So, structurally, we are in a very good market.”

Investor demand for logistics is not just being fuelled by the intrinsic attractions of the sector. Uncertainties in the previous staple sectors, offices and retail, are causing many to shy away from these assets to focus on the alternatives and the resultant yield compression in logistics and industrial property can make some situations less attractive.

Local sourcing and development

“There are some transactions happening where we do not feel that we should compete. So, we let them go,” says Pörschke. “That’s particularly true for very international, large portfolios with a significant portfolio premium. This is why we also do the more local sourcing and development for which we are equipped because we are present in different countries and markets.”

Pörschke contends that P3’s international coverage is unique among investment companies. “Not in the sense that you have an office somewhere and then investors in many countries, but if you are really truly on the ground in these different markets, this is certainly unique.” 

‘The advantage of the sector is that there is structural growth and so over the next years we will see market demand growing.’

Frank Pörschke, P3 Logistic Parks

Another advantage that P3 has is that it is able to take a long-term view. “We’re not a trader developer. We are investing and we are developing, but for the long run. So we really have the long-term perspective, and I think this is also a differentiator. It’s not about achieving the next three months, it’s about achieving decent results in a sustainable way.”

As a privately owned business, P3 has always been able to take that long view, but when Singapore’s sovereign wealth fund GIC bought the company from TPG Real Estate and Ivanhoé Cambridge in 2016 the plan was to step up the level of activity.

Major portfolio acquisitions followed. The €950 million purchase announced in December 2019 of the Maximus portfolio of 28 properties from Apollo Global Management bought P3 more than 1 million sq m of space. Then the c€800 million acquisition of the 650,000 sq m Matrix portfolio in a sale-and-leaseback deal with German retailer Metro was announced in October 2020.

Change of focus

“Last year we did two big portfolio transactions. This year we haven’t done any,” says Pörschke. “Of course, we are still looking, but it hasn’t materialised.” The change in the market has brought about a slight shift of focus to more local acquisitions and doing even more development than the company did in the past. 

And although P3 is and has to remain a dedicated logistics player, Pörschke says there is always scope to “do something different at the edges”. 

“We are not only looking at big boxes, we are looking at more last-mile properties as well, and we do have different types of warehouse logistics such as chilled space and we may look at things like a data warehouse. We are looking at these things, but the core is and will remain ‘the warehouse’.” 

P3 is able to take the long view and while it remains a dedicated logistics player has the scope to do “something on the edges”

The Metro acquisition is an example of the flexibility of interpretation that is needed as this was a portfolio of cash-and-carry warehouses. Pörschke points out that it’s all logistics and while in a conventional warehouse an employee does the picking, in the “retail logistics” warehouse, that falls to the customer.

“They’re buildings in very good locations so with a very good long-term perspective. And of course it’s a good tenant that we have in Metro, which we are happy to go along with, as long as both want,” he says.

Pörschke took over the CEO role from Tim Beaudin, previously chairman of the P3 board who had stepped in when Ian Worboys retired from the business in April 2019, later returning to the market as the head of US developer Trammell Crow’s European logistics drive. Pörschke’ brief from GIC is to take the company forward in a “not too dissimilar direction” to the past five years. 

“The aspiration is to be the European market leader and this always has two dimensions. One is size – we intend to grow – the other dimension is excellence.”

He says P3 wants to provide tenants with the best service, wants the most professional organisation and wants to be an attractive employer to attract the best talent. “The appreciation of this asset class and of the industry is increasing. I hope that we see more and more highly qualified talent not only coming into the sector but, of course, predominantly joining us.”