P3 Group's Logistics Yield Moved Out to 5.74%. Rental Growth of 0.3% Could Not Cover It

The one thing I keep asking logistics developers is what exit yield sits in their appraisal. Most answer with last year's number. A landlord with 10.2 million sqm across ten countries has just moved its own yield the wrong way.

P3 Group S.à r.l. reported its interim results for the first half of 2026 on 10 September. Net operating income rose 6% to EUR 284m, from EUR 269m a year earlier. Portfolio value was held at EUR 10.8bn. The like-for-like value still fell 0.4%. Yield expansion to 5.74% outweighed estimated rental value growth of 0.3%.

The tenants are not the problem

Nothing in the operating numbers looks weak. Leasing reached 0.9 million sqm, in line with the same period of 2025. The re-leasing spread was positive at 1.6%, with leases signed on average above estimated rental value. Like-for-like occupancy stood at 95.9%. Rent collection was 99.9%. The EBITDA margin came in at 86%, against 87% a year earlier.

The demand evidence around the portfolio points the same way. CTP signed more than 104,000 sqm of leases at CTPark Ilowa in western Poland in early September. A Chinese fast-fashion e-commerce platform took 66,214 sqm across two buildings. An international third-party logistics operator signed for 37,801 sqm. Hillwood Polska let more than 65,000 sqm at two Polish parks, filling both to capacity.

The valuation moved on the discount rate

Work the two disclosed figures back and the size of the shift is small. A 0.4% fall in value against 0.3% of rental growth implies about four basis points of outward yield movement. That is this article's own arithmetic from P3's reported numbers. Four basis points in six months cancelled a half-year of rental growth. Value went down with it.

That is the whole story of the half. The valuation was set by the discount rate. Occupier performance barely registered. At 5.74%, holding value flat against four basis points of drift needs about 0.7% rental growth in the half. Call it 1.4% a year.

Prime rents clear that bar and the regional average falls short

Cushman & Wakefield published its DNA of Real Estate Europe report for the second quarter of 2026 on 9 September. European prime logistics rents rose 2.4% year on year. Across CEE, logistics rents rose 0.8%. Prime office rents in Europe rose 4.5% and retail rents 3.0%.

Put those two numbers next to the 1.4% needed and the split is clear. Prime European sheds are growing rents fast enough to absorb a small yield move. The CEE average falls short. P3's own like-for-like growth of 0.3% in the half annualises to roughly 0.6%, close to the regional figure.

Bucharest shows the same tension from the pricing side. Prime logistics rents there rose 2.1% to EUR 4.8 per sqm per month. Prime logistics yields held at 7.5%, among Europe's highest. High going-in yields leave more room for drift than tight ones do.

One caution on comparing these figures. P3's 5.74% is a portfolio yield across 10.2 million sqm in ten countries. Bucharest's 7.5% is a prime yield on the best assets in one city. They are different measures and move for different reasons. The direction of travel is what matters here.

Where the earnings came from

Net operating income grew 6% while like-for-like value fell. The gap tells you where the earnings came from. P3 completed 229,000 sqm of acquisitions and developments in the half and disposed of 208,000 sqm. Portfolio value held at EUR 10.8bn because the transactions offset the revaluation, on the company's own description.

Balance sheet metrics stayed inside the range. Loan to value was stable at 47.0%. Liquidity was about EUR 1.0bn and interest cover 2.8x. P3 holds a BBB investment-grade rating from Standard and Poor's and is headquartered in Prague. The company also changed chief executive. Simon Carter joined on 7 September 2026 as CEO Designate and takes the role formally on 17 September.

What this changes for the next appraisal

Developers underwriting European logistics for 2027 delivery face a harder sum than the leasing market suggests. Build cost and rent are behaving. The exit yield is doing the damage, and four basis points is a rounding error in most appraisals. Lenders should read a flat portfolio value the same way. A book held level by buying and selling is a different asset from a book held level by valuers.

For contractors, the read-across is simple. Logistics starts will keep coming where a developer can hit a value-on-cost spread without a yield tailwind. That favours build speed, fit-out standard and power. It also favours locations where prime rental growth runs above 2%. Everywhere else, the sum has to close on cost.

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📊 Analytics & Strategic Insight

The yield is the counterparty nobody underwrites

The decision most in this industry are avoiding:

👉 Repricing the exit yield instead of arguing about the rent. Most appraisals still carry an exit yield set when money was cheaper. Rent moved 0.3% in this portfolio over six months. The yield moved four basis points and did more damage.

👉 Reading a flat portfolio value as stability. This book held at EUR 10.8bn because 229,000 sqm was bought or built and 208,000 sqm was sold. Transactions carried the number. The underlying assets fell 0.4%.

👉 Assuming the headline rental index applies to your asset. European prime logistics rents rose 2.4% and CEE logistics rents rose 0.8%. A prime index describes the best buildings in the best locations. Most warehouses are neither.

Here's the full context:

→ 2023: P3 reported net operating income of EUR 423m. Growth came largely from acquisitions and development.

→ 2024: Net operating income rose 17% to EUR 493m and the portfolio passed EUR 10bn. Acquisitions and development again did the work.

→ H1 2025: Net operating income of EUR 269m set the base that this year's 6% increase is measured against.

→ Q2 2026: Cushman & Wakefield recorded European prime logistics rental growth of 2.4%. CEE managed 0.8%.

→ Most recent: P3's H1 2026 results showed yield expansion to 5.74%. Like-for-like value fell 0.4% despite rental value growth of 0.3%.

What this means for infrastructure operators, contractors and investors:

✅ Development margin now has to come from cost and speed. A flat or drifting exit yield removes the tailwind that carried schemes through 2015 to 2021. Value on cost has to be earned on the build.

✅ Covenant headroom looks better than the asset trend. Loan to value of 47.0% and interest cover of 2.8x are comfortable. Both sit on a value that only held flat because assets were traded.

✅ Location selection is now a rental-growth decision. Markets where prime rents grow above roughly 1.5% a year can absorb small yield drift. Markets at 0.8% cannot, and the difference shows up in the exit.

3 moves you can make this week:

1️⃣ Rerun your appraisal at plus 25 basis points. Take every scheme with a 2027 or 2028 exit and move the yield out a quarter of a point. Write down which ones stop working and by how much.

2️⃣ Separate transaction effects from valuation effects in every portfolio you hold or lend against. Ask for like-for-like value movement alongside the headline. The two numbers can point in opposite directions.

3️⃣ Check which rental index your model is using. If it is a prime index and your asset is secondary, replace it with the market average for that country. Then see whether the growth still covers the yield.