Target Information

The asset under consideration is located in Hochheim am Main, an area strategically positioned between the cities of Frankfurt, Mainz, and Wiesbaden. This prime location offers exceptional connectivity to major motorways including the A3, A671, A60, and A66, ensuring efficient access for logistics operations. Currently, the property is fully leased, but the developers, PAA and Scantum DW, have plans to reposition it into a Grade A logistics facility.

This transformation will involve partial demolition and new development that will impact around 70% of the existing structure, which dates back to the 1970s. The remaining portion, built in the 2000s, will undergo refurbishment. Notably, the project is being undertaken in accordance with DGNB Gold standards, with an emphasis on sustainability, as the completed asset will be heated without the use of fossil fuels. Future tenants will benefit from flexible logistics spaces ranging from approximately 5,000 sqm to nearly 20,000 sqm, catering to various operational demands.

Industry Overview in Germany

The logistics sector in Germany is experiencing a significant boom, largely driven by e-commerce and the increasing demand for efficient urban distribution networks. As the largest economy in Europe, Germany serves as a vital logistics hub, with the Rhine-Main area standing out due to its concentration of businesses and transportation networks. The continued rise in online shopping and changing consumer expectations are pushing logistics companies to seek out strategic locations with fast delivery capabilities.

Furthermore, the German government is investing heavily in improving infrastructure, including roads and rail networks, which supports the logistics industry by facilitating faster and more reliable transportation services. As companies adapt to the evolving market landscape, investing in modernized logistics assets has become crucial for maintaining competitiveness.

In addition, sustainability practices are becoming imperative in the logistics sector, with an increasing focus on environmentally friendly operations. This shift is prompting many companies to seek out properties that align with green building standards and reduce carbon emissions, contributing to a more sustainable future for logistics in Germany.

With the implementation of stricter emissions regulations and a societal push for greener practices, logistics facilities that prioritize sustainability will increasingly attract tenants and investment, reinforcing the importance of strategic decisions when it comes to property development in this sector.

Rationale Behind the Deal

The decision to invest in the Hochheim am Main property aligns with Pictet's value-add strategy, aiming to create long-term sustainable assets in high-demand logistics locations. The ongoing demand for logistics space, particularly in key last-mile distribution areas, positions this project well for future growth. The ability to refurbish an older asset while adhering to contemporary environmental standards further enhances its attractiveness to a wide range of potential tenants.

Additionally, given the strategic location within the Rhine-Main region, the deal opens the door for further investments with similar strategic goals. This creates potential synergies and fosters a diversified portfolio in a rapidly evolving market.

Investor Information

Pictet Alternative Advisors, led by Simon Geldmann, heads the investment strategy for the firm in the German real estate sector. With a cautious approach, Pictet has identified compelling opportunities in Germany, only recently making its initial investment in August 2024 after extensive market examination. This marks the firm’s second acquisition in the country, highlighting its commitment to establishing a significant presence in the logistics market.

Pictet's investment philosophy is grounded in thorough market analysis, and their recent ventures reflect a strong confidence in the potential of German real estate. The collaboration with Scantum DW showcases a strategic partnership that combines Pictet’s investment expertise with Scantum's operational capabilities, aimed at maximizing the asset's value.

View of Dealert

This transaction is viewed positively from an investment perspective. The location in the Rhine-Main area not only guarantees strong demand due to its logistics-centric characteristics but also allows for adaptable logistics spaces that will appeal to a variety of tenants. The thorough renovation and refurbishment plans conform to modern sustainability standards, positioning the asset to attract environmentally conscious companies.

The partnership between Pictet and Scantum DW, both experienced entities in the real estate and logistics sectors, adds further credibility to this venture. Their combined expertise is expected to effectively navigate the complexities of the refurbishment process while maximizing operational efficiency.

Moreover, with growing trends in e-commerce and demand for last-mile facilities, this investment has the potential to yield substantial returns. The strategic choice to enhance a location-based asset enhances its market value and aligns with the overarching trends in the logistics industry.

Overall, this acquisition represents not only a promising investment opportunity but also a forward-looking strategy in an essential sector that is evolving towards sustainability and efficiency.

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