Goodman, CPPIB boost investment in China logistics joint venture

As with previous investments, the partners' allocations reflect the 80-20 ownership structure of the joint venture - known as Goodman China Logistics Holding (GCLH) - with CPPIB injecting $400 million to Goodman's $100 million.

GCLH was formed in 2009 to invest in logistics properties in prime locations across mainland China. It was seeded with 4-5 existing projects that Goodman had on its balance sheet and the initial equity commitment was $300 million. As of September GCLH had invested in 27 logistics projects in 10 Chinese markets, including Shanghai, Beijing, Tianjin, Kunshan, Chengdu, Suzhou and Jiaxing.

"CPPIB's additional equity reflects the success of the JV to date and the longstanding partnership we have with Goodman," Jimmy Phua, managing director and head of Asia real estate investments at CPPIB, said in a statement. "The fundamentals of the Chinese logistics and e-commerce sectors remain compelling, which underpin the growth in demand for prime logistics facilities."

Goodman has approximately 800,000 square meters of developments underway in China and a land bank of 4.3 million sqm.

The company has approximately A$27.7 billion ($24.3 billion) in assets under management globally, held in commercial property investment funds. Its cornerstone investments in these funds are worth in excess of A$4.6 billion. In recent years, Goodman has gravitated towards a joint venture or club-style of investment, partnering with sovereign wealth funds and pension funds on dedicated vehicles.

This approach has been adopted by a number of logistics fund managers with large LPs that want to deploy more capital into long-term, yield-generating assets. China is particularly attractive because of the growth in the sector.

Logistics space per capita is one twelfth that of the US, and even with projected expansion from the current 550 million square meters of space to 2.4 billion sq m by 2029, the per capita figure will still be one third that of the US. E-commerce alone represents a significant source of demand. Goodman has gone from zero e-commerce three years ago to around 20% today.

Earlier this year, Global Logistics Properties (GLP) - a Singapore-listed warehouse operator and fund manager - received an investment of $2.5 billion from several Chinese private equity firms, financial institutions and state-owned enterprises. They took a 1.5% stake in GLP and a 30.3% interest in a subsidiary that now houses all of the company's China assets.

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• Topics
• Industrials
• Real estate
• Expansion
• Greater China
• China
• CPPIB
• Goodman
• Logistics
• Growth capital
• Real estate