Real assets

Video Insight: Logistics

Logistics: retailers' new front office

Listen to Justin Curlow and Kerrie Shaw discuss the shift in the logistics and retail industry in more detail, click on the video link below. 

Executive Summary

There has been a fundamental shift in the retailer model towards omni-channel retail. So that they can respond effectively to the modern consumer’s demand for goods as, where and when they want them, retailers require a seamless supply chain.

This has resulted in a surge in demand for modern logistics space and, with e-commerce penetration expected to continue to rise, we believe there is pent-up demand for suitable logistics stock. We expect the logistics sector to continue to outperform, with returns driven by above-inflation rental growth, partly resulting from increased upward pressure on land values.

However, as the amount of capital targeting the logistics sector is significant, stock selection will remain critical to long-term performance, with assets proximate to key population centres and in land-constrained areas expected to have the strongest return prospects.

While the increasing obsolescence of logistics assets is a concern, we argue that the quantum of users requiring the absolute latest in supply chain solutions remains rather small, and that obsolescence risk may be mitigated by investing in a large, diversified portfolio of modern logistics assets in land-constrained locations close to key population centres. Development and lease-up is one of our preferred strategies as it can offer investors a way to access scarce modern assets at a higher yield on cost than standing core investments.

Development and lease-up is one of our preferred strategies as it can offer investors a way to access scarce modern assets at a higher yield on cost than standing core investments.

Click here to download the full article.

This material (the “Material”) is solely for the use of the recipient who has received it directly from AXA Investment Managers – Real Assets or any of its affiliates (“AXA IM – Real Assets”) for information and discussion purposes only. It is to be treated strictly confidential. This Material and any information contained herein should not be copied or circulated, in whole or in part, without the prior written consent of AXA IM – Real Assets. This Material does not constitute an offer or solicitation, nor is it the basis for any contract for the purchase or sale of any investment, security or product. It is not for use by retail customers under any circumstances. AXA IM – Real Assets disclaims any and all liability relating to a decision based on or for reliance on this Material. 

This Material has not been reviewed, approved or disapproved by any regulatory authority in any jurisdiction. The distribution of this Material in certain jurisdictions may be restricted by law. The recipient represents that it is able to receive this Material without contravention of any applicable legal or regulatory restrictions in the jurisdiction in which it resides or conducts business. AXA IM – Real Assets does not accept any responsibility for ensuring that a recipient complies with applicable laws and regulations. The Material does not constitute, and may not be used for or in connection with, an offer or solicitation by anyone in any jurisdiction in which such offer or solicitation is not authorized or to any person to whom it is unlawful to make such offer or solicitation. Due to its simplification, this Material is partial and thus the information can be subjective. The information set forth herein does not purport to be complete and is subject to change without notice. This Material does not take into account the recipient’s objectives, financial situation or needs. This Material shall not be deemed to constitute investment advice and/or tax, accounting, regulatory, legal or other advice and it should not be relied upon as the basis for a decision to enter into a transaction or as the basis for an investment decision. The recipient is urged to consult with its own advisers with respect to legal, tax, regulatory, financial, accounting and other matters concerning any investment decision.

Analysis and conclusions express the views of AXA IM – Real Assets and may be subject to change without notice. All information, analysis and conclusions herein present AXA IM – Real Assets’ current knowledge and market estimation at the time of its production. Nevertheless it can come to unintended erroneous statements or presentations and the information may change at any time without previous announcements and/or notices to the recipient of this Material. Thus, a liability or guarantee for the up-to-datedness, correctness and completeness of the allocated information, estimation and opinion cannot be assumed. Information contained herein may vary from previous or future published versions of this Material. Information regarding the background and experience of personnel of AXA IM – Real Assets are provided for information purposes only. Such persons may not necessarily continue to be employed by AXA IM – Real Assets and may not perform or continue to perform services for AXA IM – Real Assets. The reference to league tables and awards are not an indicator of the futures places in league tables or awards. Unless otherwise noted, information provided herein is current as of the date of this Material.

Some statements and analysis in this Material and some examples provided are based upon or derived from the hypothetical performance of models developed by AXA IM – Real Assets and/or third parties. AXA IM – Real Assets expressly disclaims any responsibility for (i) the accuracy or completeness of third party data (ii) the accuracy or completeness of the models, assumptions, forecasts or estimates used in deriving the analyses, (iii) any errors or omissions in computing or disseminating the analyses or (iv) any uses to which the analyses are put. Any hypothetical illustrations, forecasts and estimates contained in this Material are forward looking statements and are based upon assumptions. Hypothetical illustrations are necessarily speculative in nature and it can be expected that some or all of the assumptions underlying the hypothetical illustrations will not materialise or will vary significantly from actual results. Accordingly, the hypothetical illustrations are only an estimate and AXA IM – Real Assets assumes no duty to update any forward looking statement. This Material may also contain historical market data; however, historical market trends are not reliable indicators of future market behaviour.

Although some information has been provided by AXA IM – Real Assets, the information is based on information furnished by third parties the accuracy and completeness of which has not been verified by AXA IM – Real Assets. All information and data in this Material is established on the accounting information, on market data basis or has been sourced from a number of recognized industry providers. All accounting information, except otherwise specified, is un-audited. While such sources are believed to be reliable and accurate, none of AXA IM – Real Assets or its respective affiliates, directors, officers, employees, partners, members or shareholders assumes any responsibility for the accuracy or completeness of such information. Details of these sources are available upon request. 

AXA IM – Real Assets makes no representation or warranty (express or implied) of any nature nor is responsible or liable in any way with respect to the truthfulness, completeness or accuracy of any information, projection, representation or warranty (express or implied) in, or omission from, this information.
© 2019 AXA Real Estate Investment Managers and its Affiliated Companies. All rights reserved.