Bridges Fund Management has agreed 15 logistics funding deals in just over a year, deploying £150m of equity in the process from its property funds, React News can reveal.
The logistics platform created by Bridges now spans 2.5m sq ft, translating into a gross development value north of £600m.
Bridges, which looks for early-stage value-creation with an initial £5m-£10m land value investment sweet spot, has managed to buy all but two sites off market, and had secured most of the pipeline by the end of the summer last year.
Around 75% of Bridges’ funding deals have involved former corporate sites such as brownfield and repurposed out-of-date offices.
“We’re fortunate to be working with some of the best specialist developers in the sector, and while most of the developments are still at an early stage, we’re already seeing promising levels of interest”.
The 15 projects – located from Edinburgh down to Havant on the south coast – are in partnership with seven different development partners, among them XLB, Wrenbridge, Equation, Kingsbridge, Opus North and Chancerygate.
Henry Pepper, investment director at Bridges Fund Management, said: “When the pandemic hit, we realised quickly that it would accelerate the growth of ecommerce – which we felt would create increased demand for urban and last-mile logistics sites. We wanted to create a platform of purpose-built low-carbon logistics developments that would meet this demand from corporate occupiers.
“We’re fortunate to be working with some of the best specialist developers in the sector, and while most of the developments are still at an early stage, we’re already seeing promising levels of interest.”
Sustainability agenda chimes with occupier needs
React understands that Bridges is already in prelet discussions for about 30% of the space under development.
Each project will be focused on being a net zero carbon, BREEAM Excellent development.
Guy Bowden, a partner at Bridges, adds: “Our goal with these developments is to make them carbon neutral over the entire lifecycle of the building – to include site development, construction and operation. What we’ve found over the last few years is that by investing in sustainable design, we actually make these sites more attractive to corporate occupiers, because it reduces running costs and future-proofs the site against potential legislation. That also makes them attractive assets for institutional investors looking for resilient long-term returns.”
New fundraising progressing well
The investor has been deploying capital from Bridges Property Alternatives Fund 4, for which it raised £220m in 2017. Bridges is in the process of raising more than £250m for its fifth fund, sources told React News.
Local authority pension funds, financial institutions and foundations are among those that have invested in Bridges’ funds in the past.
The institutional backers of Bridges’ funds chimes with the want and need to make the industrial platform ESG-compliant and sustainable.
Chris West, head of indirect property at the Church Commissioners for England, said: “Addressing carbon emissions from the built environment will be absolutely key to meeting the Commissioners’ overall 2050 net zero carbon reduction targets. Our investment with Bridges is part of our broader sustainability-focused strategy of moving the Commissioners’ portfolio to net zero by 2050.”
Pepper adds: “Across the portfolio we’re seeing strong demand from different areas of the digital economy – online retailers, parcel delivery operators, packaging companies, data centres, even the film production industry. In some locations rents are more than 10% ahead of where they were six to 12 months ago. So we’re very positive about the prospects for the urban logistics sector in the next few years.”