CPPIB, Goodman commit $1.7b to China logistics partnership
Canada Pension Plan Investment Board (CPPIB) and logistics operator Goodman Group have jointly committed $1.7 billion to an existing logistics partnership in China.
Consistent with the partnership’s equity structure, the investment was made on an 80:20 basis, with CPPIB allocating $1.4 billion and Goodman contributing $350 million. It brings their total combined commitment to the project to $5 billion.
The Goodman China Logistics Partnership (GCLP) was established in 2009 with an initial equity commitment of $300 million and was recapitalized with about $1.2 billion in 2015. The joint venture invests in high-quality properties in prime locations across mainland China.
GCLP’s portfolio totals 33 properties comprising 2.5 million square meters of modern logistics space that is said to be operating at 99% occupancy. The fresh capital will be used to make a number of acquisitions currently undergoing due diligence and grow the portfolio to more than 5 million square meters.
“The fundamentals of the Chinese logistics sector remain compelling, driven by domestic consumption growth in China, including e-commerce which underpins the strong demand for prime logistics facilities,” Jimmy Phua, CPPIB’s head of Asia real estate investments, said in a statement.
Australia-based Goodman controls $38.3 billion of assets across more than 360 properties globally, about 75% of which is in Asia Pacific. Profit for the 2018 financial year came to A$846 million ($617 million), up 9% from the prior year.
CPPIB invested about $250 million last year in a similar joint venture with Goodman in Hong Kong. The Goodman Hong Kong Logistics Partnership holds a 50% interest in Goodman Interlink, a warehousing development in the Tsing Yi ports district and is considered the largest industrial vehicle in the territory.
Other activity by CPPIB in this space includes a $500 million investment last year in IndoSpace Core, an India-based joint venture between Everstone Group and Canada’s Realterm Global. CPPIB also established a partnership with GLP in 2016 with a plan to jointly invest about $880 million in Japan.
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