Accolade fund accelerates growth in Q2, appreciating by 5.45% over Q1+Q2 combined, largely due to growth in rents
During the second quarter of this year, the Accolade Industrial fund appreciated by 3.66% in EUR, which is consistent with an expected annual return of between 7 and 10%. A growth in rents has had a positive impact on the fund’s returns. This was partly facilitated by inflation clauses included in rental contracts. The fund’s portfolio now encompasses more than 1.2 million m² of premium industrial property, which is virtually fully occupied. More than 2,800 qualified investors have already placed their trust in the fund.
The industrial property segment has experienced three years of unprecedented growth, with the market remaining largely untouched by negative forces. There currently seems to be two contradictory trends happening in the market across Europe. The first is the expected rise in interest rates. This could, in turn, lead to a slump in property prices. However, contrary to this trend, there is a significant rise in rents, which could, by contrast, increase property prices. “The market is becoming more expensive and there is still a shortage of warehouse spaces – so there remains some scope for rents to increase. In terms of the fund, from the beginning of next year we expect a further increase in rents. This is facilitated by inflation clauses, which we believe to be an effective investment protection. Such clauses guard against at least 80% of the impact of inflation,” explained Milan Kratina, Accolade CEO.
Another long-term trend of the economy at the moment, which has a notable impact on the industrial property market, is nearshoring. This is increasing the demand for a more self-sufficient Europe and the need to make and store more on the Old Continent. Nearshoring also has a positive effect in terms of reducing the carbon footprint of industry and services. “The need to respond to the conflict in Ukraine will probably mean a delay in closing certain coal-fired power plants and will open up further discussions about nuclear power. It is undeniable, however, that across society there is a greater emphasis on sustainability and decarbonisation,” highlighted Milan Kratina.
From a return perspective, the Accolade Industrial Fund appreciated by 4.23% in Czech crowns and 3.66% in euros in the second quarter of this year, which is consistent with an expected annual return of between 7 and 10%. “New customers from a host of logistics and manufacturing companies, as well as e-commerce firms, are constantly coming to us in need of new premises. Although analyses are showing a slight year-on-year slow down in this area, we don’t see it with regards to interest in new sites,” remarks Milan Kratina. The fund’s portfolio currently spans more than 1.2 million m², with only 200 m² of free space.
In the second quarter of this year, the fund’s portfolio expanded further with the addition of four sites, two in the Czech Republic and two in Poland. One is a modern industrial park in Zdice in the Central Bohemian Region for Doosan Bobcat, a retailer of agricultural and construction equipment. Premises which form part of a new industrial zone on the site of the former glassworks in Hostomice near Teplice were also added to the fund. It is there that sanitary products retailer Sanitino is based. On this site the gradual development of a complex of buildings with a total area in excess of 31,000 m2 is planned.
In Poland, more than 13,000 m² were added to the portfolio in the form of the Koszalin park in the north of the country for Accolade’s tenant AutoStore. This location boasts a host of positive aspects, from the number of residents, which is over 100,000, to its location in the special economic zone of Słupsk. The latter is particularly beneficial for companies looking to expand into the Pomeranian Region. Another plus is its proximity to the Baltic Sea, which facilitates access to Scandinavia as well as offering key road connections to Berlin, for example. The second Polish addition is Legnica Park, with a total area of nearly 27,000 m², which was developed on a brownfield site of a former military airport. The park is situated in one of the most industrialised and heavily urbanised regions of Central and Eastern Europe.