Manrre Logistics Fund has made two strategic investments in Jebel Ali Free Zone (Jafza), DP World’s leading trade and logistics hub, increasing the value of its portfolio by 22.5% to $71.3mn.
Launched in 2018 with the support of Dubai-based Palmon Group, Manrre focuses on institutional-grade logistics and industrial properties in locations including Jafza, Dubai Investments Park and Dubai South, in addition to investments in the cloud, dark kitchen and alternative spaces in the UAE. The Fund is managed by Dalma Capital Management Limited, which is regulated by the DFSA.
The first of the investments in Jebel Ali is a facility leased to Infofort, a subsidiary of Iron Mountain which is a company focused on records management, data backup and recovery, document management, and data centres.
The second is AMS Integrated Solutions, a Danish company operating in nine countries specialising in fleet management, technical training, and logistical needs for mission readiness.
Both new additions have fully guaranteed 10-year lease agreements in place.
With regards to the expansion of the fund, we interviewed Kunal Lahori, director of Manrre about what this means for the company’s growth and expansion in the region and internationally.
How is Manrre targeting its investments towards the development and construction of warehousing facilities and industrial facilities?
At Manrre, the types of assets we focus on are largely within the industrial logistics and e-commerce space. We do a lot of built-to-suit development projects for multinationals, we have a team that is experienced in building world-class warehouses with best-in-class facilities keeping up with the constant changes that our clients expect. A typical built to suit transaction would take 18 months where we would first understand client requirements and then go about constructing a custom-built facility for them, this would be secured by a 10-15 year triple net lease. We work with high-quality architects, interior designers, and contractors to achieve the desired outcome for the client.
We also look at distressed assets where a client has abandoned the project and we come in, take it over and complete the construction with our preferred partners.
As such, what are its properties in such areas catering to? Meaning, how is Manrre helping the logistics sector with its investments?
We aim to generate a regular source of income for our investors by focusing on warehouses, within this we invest in five key sectors, e-commerce fulfilment centres, distribution and logistics facilities, data centres and document storage, industrial facilities, and cloud kitchen and dark stores.
The UAE retail e-commerce market reached a record $3.9bn in 2020, a 53% year-over-year increase driven by the Covid-19-led digital shift. With this growth comes the significant requirement for last-mile logistics, and we are helping the logistics and digital economy by investing in real estate that can be used for such a purpose, we currently have multiple assets in the portfolio leased to Deliveroo Editions, Deliveroo Hop Grocery Delivery, Talabat Grocery, Noon.com grocery delivery, all these players require multiple units in each zone where they want to access their customers.
Considering Manrre just signed a 10-year lease agreement with Iron Mountain, what does this mean for its investment portfolio?
We currently have 24 assets in our portfolio consisting of 77% logistics, 12% industrial, 10% alternative. Our portfolio is diversified and has a weighted average lease term (WALT) of 5.3 years, longer leases provide our investors more stability and confirmed future cash flows which is a risk-mitigation measure. On the Iron Mountain transaction specifically, an acquisition of this asset strengthens the tenant base of the fund by providing an NYSE-listed entity as a tenant of the fund.
Manrre is one of the few players in this niche space and presents investors with a unique opportunity for exposure to a growing class of regional assets. The fund has a 3-year track record and delivered an annualized ROI of 7.7% since inception which in comparison to other global real estate funds is on the higher end of the spectrum.
Is Manrre investing/or planning to invest outside the UAE?
Manrre’s journey is just starting and we are now looking to scale to the wider GCC market. Moving forward, we will continue to focus on expanding our footprint in a steady pace. In today’s inflationary environment, real estate investments provide potential recurring income for investors and can keep pace or exceed inflation in terms of recurring income and appreciation.
Further we are focused on expanding our portfolio based on the investment viability of the physical asset as opposed to the physical location. When considering places like Abu Dhabi, Saudi Arabia and beyond, they are always on our radar with the team consistently evaluating them as per our strategy and investment criteria; right asset, right tenant, right industry, long-term growth viability. We at Manrre operate from a location-agnostic standpoint. Independent of the location, we seek out assets based on quality and ROI – a good asset with an even better tenant.
Lastly, has Manrre seen the growth in demand for industrial facilities in the UAE since the pandemic? Considering localisation gained so much traction at that time?
Absolutely. As investors within this space for over three decades, we identify trends earlier and have seen significant growth over the last two years. Especially due to the shipping delays, companies are holding more stock than ever which lease to an increase in demand. We have also seen a shift in demand more towards e-fulfilment and distribution centres rather than other areas within the industrial space.
The UAE retail e-commerce market reached a record $3.9bn in 2020, a 53% year-over-year increase driven by the Covid-19-led digital shift. In addition, the current rising inflation rates combined with global macro instability has seen a rise in demand growth for the real estate investment sector which has traditionally been viewed as a stable base.
This continued growth drives increasing demand for logistics real estate, industrial warehouses and fulfilment centres; all of which form the core of the Manrre Fund’s portfolio.
This article was originally published by Construction Week Online
