It was confirmed today that First Industrial and Panattoni Europe have merged to form a new development company in the UK, named First Panattoni. The merger coincides with the company’s announcement that it has raised a first phase capital facility of £300m to spend on new land purchases and speculative development in the UK.
Robert Dobrzycki, Chief Executive Officer of Panattoni Europe elaborates on the decision “…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 the largest industrial developers in Europe, our focus now is on building a UK business, so we can provide our clients an integrated pan-European platform with best-in-class development expertise.”
Panattoni is realistic about the dynamics of the UK property market, which has many established players and operators. Dudley Mitchell, Director of the Panattoni Development Corporation sets out the company’s vision “…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 3,000,000 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 down turn. The company quickly established its credentials with its first deal being a 1.0m 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. Having now firmly established the business as being capable of delivering the country’s largest build-to-suit projects, the transformation into First Panattoni and the move into strategic scale spec development may prove very timely.
Matthew Byrom, Managing Director of First Panattoni reflects “…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 concludes “…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, but it also provides the perfect conduit to deploy the weight of capital we have looking to invest in the UK”.