WDP develops and invests in logistics property (warehouses and offices). WDP’s property portfolio amounts to around 5 million m². This international portfolio of semi-industrial and logistics buildings is spread over around 250 sites at prime logistics locations for storage and distribution in Belgium, France, the Netherlands, Luxembourg, Germany and Romania. Dana Bordei, commercial director, WDP Romania talks about plans and trends after the first half of 2020.
What type of adaptive measures the company / your project(s) needed? What were the lessons of this period?
We had an impact on construction sites, where less people worked in shifts with security measures to protect teams, but all our works went ahead as scheduled, honestly one of the lessons is to panic less in the future. We have a very diverse client structure, around 25% production – majority of them automotive and 75% different logistic providers or operators. All our tenants are large companies that could support operational costs during this period. In general, we continued our normal work and also our tenants; for example, Yazaki has 6,000 employees and not a single case was registered.
What is the status of your current project(s) and investments planned for 2020-2021?
From all the niches of the real estate market, I believe that industrial sector will be boosted after this period, a lot of trading activities will be moved online and we feel this trend. I think we will have some new investments, relocation of production facilities in the region or in our country. I think investors are looking at this sector more than at other asset classes. The office sector will be significantly affected, as a business lesson I think that everybody discovered that working from home is possible and productive. Companies will discover that if they allow 1-2 days of working from home, they will need less office space and I hear a lot of them, even from our clients which have office spaces, that this period was a fantastic lesson from this perspective. We, in the industrial sector, are very confident that the outcome will be positive.
What are your expectations from the public sector, state projects to support future business?
To create infrastructure, a plot for industrial is available everywhere, but if you don’t have the correct infrastructure to reach it, is not viable. If infrastructure is not created in the rhythm we want, at least to create a coherent urban planning approach, in all the cities, and to approve zoning permits for large areas, so that developers won’t need to do a Zoning Urban Plan, to have them defined. Developers do not go in obscure locations, they want to settle in areas where there is logic for industrial, in all the cities. At WDP for example, we have developed all our 25 locations in the country with our work and expertise, but you would expect at least for the big cities, where is clear that industrial areas are necessary, to have predefined urban planning conditions and to worry only about the building permits. There are cities in the wider European region, where they offer all the conditions, in Romania we still have to overcome a lot of obstacles. Some coherence would be useful in HR legislation, for flexible / part time work. Many companies complained, they had two options – send people home and close or if they wanted to remain active, they didn’t receive any help. In all this period, it was the hardest for those who remained active.
What transformations you expect in your sector?
The prices will remain the same. We contracted ahead the entire investments, when they enter the premises, a developer already spent all the investment budget, there is almost no possibility to adjust the margins, no possible way to optimize. I do not believe the prices will drop, there is still a strong demand and the vacancy level is relatively low. If something dramatic will not happen also in the second part of the year, there is no liquidity problem or over production. There will be inflation, because all the money spent in this period must be compensated somewhere, but I don’t see a general contraction, because all we had was a full stop for a while. Everybody will have a setback, due to the lack of production and sales for three months. The real impact will be acknowledgeable in Q4 and next year. The impact of automation will not be as fast as we talk about, but all the players are having a plan, and it was accelerated by this crisis. For automation the level of investments is very high, the human labor is still more cheap at the moment.
What is your message to clients and partners?
We are still here, we were active in this period, the sites were developed further taking into account the safety measures. We are here to stay, we are a long-term investor, with a healthy company and strategy and all the willingness to go further. Not related to Covid, what we ask from our clients the most is to have realistic plans for the delivery of their future facilities, and not to think a deadline of 18 months and ask for the delivery in 9 months. The clients need to more realistic for the time frames of projects, the authorities move slower – for zoning permits or building permits. This is a message for clients: that they must be realistic to the whole process of development.
WDP and IFC, a member of the World Bank Group, have signed a financing package of circa 205 million euros. The funds will be exclusively dedicated to new build logistics development projects in Romania with green standard certification. Several loans will be issued by IFC directly and through the mobilization of third-party resources for a total consideration of circa 205 million euros. The loans with a duration of up to nine years, will be structured as term loans and will be partially euro-and partially dollar denominated, with WDP intending to hedge the currency risk. The debt raising will support WDP Romania in the execution of its business plan, aiming to double the portfolio from 500 million to 1 billion euros throughout 2019-23, in line with the WDP strategic growth plan 2019-23. The proceeds will be used exclusively to fund new build sustainable development projects at important logistics hubs that will be EDGE certified, enhancing Romania’s logistic infrastructure and employment within a modern and healthy working environment.
An article published in the exclusive supplement – “Market pulse report, Romania – The new normal” | June 2020
A property market tour, including major cities, with projects status and updated opportunities at the end of the lockdown in Romania – June 2020. | Essential news with the current status of further investments, clients and partners relations, new priorities for the post crisis cycle. | B2B communication report – to help you mark your statements during the changes period.