UK merger announced
Industrial developer Panattoni Europe will undertake an aggressive £300m spec development programme in the UK after merging with First Industrial.
The new company, named First Panattoni, will speculatively build mega-sheds of up to 1m sq ft across the UK.
Panattoni has raised a first phase capital facility of £300m to spend on the programme and will look to make land purchases, partner with developers or even buy-out developers with the right landbank.
Robert Dobrzycki, chief executive of Panattoni Europe, said: “Our customers and capital partners have been urging us for some time now to move to the UK, however, in the last few years we have been concentrating on volume in mainland Europe.
“Having established Panattoni as one of the largest industrial developers in Europe, our focus now is building a UK business, so we can provide our clients with an integrated pan-European platform with best-in-class development expertise.”
Panattoni said it was realistic about the dynamics of the UK property market, which has many established players and operators.
Dudley Mitchell, director of the Panattoni Development Corporation, added: “The UK market has many similarities to a number of territories we successfully operate in. Limited land supply and a slow permitting process means that land is expensive.
“To penetrate these capital intensive markets, you need to bid aggressively and spec build. We see the UK market with potential for 3m sq ft of new build product a year, but we’ll need to up scale the First Panattoni platform to meet these demands.”
Established in 2009, First Industrial was one of the first new entrants to emerge from the market downturn. The company quickly established its credentials with its first deal being a 1m sq ft build-to-suit for Marks and Spencer, which at 28m high was the largest deal by volume ever delivered in the UK. This was followed by a series of other significant projects, for occupiers such as the Co-op, Sainsbury’s DHL and Amazon.
Matthew Byrom, managing director of First Panattoni, said: “We’ve never been afraid of advancing into new and competitive markets; with recent global uncertainties and the relative weakness of the pound, many of Panattoni’s capital partners will see this as a buying opportunity.
“From an international perspective, the UK still remains a hugely attractive place to invest in real estate, with its long leases and strong balance sheet customers. Couple this with the rental growth we’ve seen across the country, and the continued growth of the e-commerce phenomenon, the interest in this sector is likely to continue.”
Carl Panattoni, chairman of the Panattoni Development Corporation, added: “We’ve always wanted to expand in the UK, but until now, we’ve never found the right partner.
“Having looked extensively within the market, we found that First Industrial had an excellent underlying business and one that reflected our values and business ethos exactly – the merger therefore seemed obvious. Not only is First Panattoni a highly complementary addition to our global network, it also provides the perfect conduit to deploy the weight of capital we have been looking to invest in the UK.”
Property Week, 19th September 2017