Aberdeen Standard Investments is set to launch the European Logistics Income investment trust in December, which aims to capitalise on the rapid growth of e-commerce across Europe by investing in related logistic properties such as warehouses and distribution centres.
It will be the first trust launched by Aberdeen Standard Investments as a combined entity, following the merger of Aberdeen Asset Management and Standard Life, which completed in August.
The group is targeting £250m for the initial fund raise, with proceeds expected to be fully invested within 12 months.
A "modest" amount of leverage will be used, taking advantage of the competitive cost of finance in Europe, the group said.
Whilst the company will invest directly in property, it will qualify as a closed-ended investment trust listed on the London Stock Exchange, therefore offering investors liquidity through the secondary market.
The European Logistics Income investment trust will target a distribution yield of 5.5% per annum, predominantly in the form of dividends, and will aim for a total return of 7.5% per annum.
It will be run by a team headed up by real estate market veteran Evert Castelein, based in Amsterdam, who will be supported by assistant fund managers Ross Braithwaite and Attila Molnar and Andrew Allen, global head of real estate investment research.
The new company will tap into the rapid growth of e-commerce across Europe by investing in European logistic properties such as large ‘big box' ultra-modern warehouses and local ‘last mile' distribution centres.
The group said occupier demand is strengthening and, typically, these properties benefit from long-term continuous leases which are annually inflation linked, thereby providing solid rental income alongside the potential for capital growth.
Commenting on the launch, Andrew Creighton, head of real estate continental Europe at Aberdeen Standard Investments, said: "We have considerable resources on the ground across Europe, allowing us to buy assets in a range of countries and construct a truly diversified portfolio of properties.
"Investment opportunities range from major distribution hubs for online giants, to single warehouses close to urban areas as customers demand faster delivery of goods."
Global head of real estate investment research Andrew Allen (pictured), who will be directly involved with the trust, added: "The European logistics market is already sizable but developing fast as e-commerce expands over the next three years, outpacing the UK and creating demand for new large distribution warehouses across the region.
"At the same time, as population growth rates rise in key European cities, competition for land intensifies - prompting a ‘race for space', particularly for ‘last mile' delivery on the outskirts of towns and cities.
"The new trust will exploit this supply-demand imbalance in the sector, as we believe this will support rental income and fuel growth."
In an environment where yields are so low, costs can make a huge difference to the outcome’
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