CEO Greg Goodman looks pretty pleased with the returns on his China deals
Goodman Group and Canada Pension Plan Investment Board (CPPIB) announced today that they are adding $500 million more in equity to their China joint venture, as investors continue to be encouraged by the returns from China’s logistics real estate sector.
In this latest capital increase, CPPIB will be kicking in $400 million and Goodman the remaining $100 million to bring the capital allocated to their Goodman China Logistics Holding (GCLH) joint venture to $2 billion.
The JV was set up in 2009 to invest in and develop prime logistics space across mainland China, and this latest round marks the fourth equity increase by the JV partners since GCLH’s inception.
97 Percent Occupancy Means $500M in New Capital
In a statement from Goodman, the Australian industrial developer noted that as of 30 September this year, GCLH had invested in 27 logistics projects across ten markets in China including Shanghai, Beijing, Tianjin, Kunshan, Chengdu, Suzhou and Jiaxing. According to the developer, the joint venture’s existing portfolio is 97 percent occupied and this new capital infusion will enable GCLH to add more China properties to its catalog.
Greg Goodman, Group CEO said, “CPPIB is an important global partner for Goodman and we are delighted to further build on our well-established relationship. With this increase in equity allocation, our China platform will be able to expand its footprint in one of our biggest growth markets, where we continue to see strong demand for high quality logistics space.”
Jimmy Phua, Managing Director, Head of Real Estate Investments Asia, CPPIB, said,“CPPIB’s additional equity reflects the success of the JV to date and the longstanding partnership we have with Goodman. The fundamentals of the Chinese logistics and e-commerce sectors remain compelling, which underpin the growth in demand for prime logistics facilities.”
Another 800,000 Sqm in the Pipeline
Goodman currently has approximately 800,000 sqm of developments underway in China, including projects in Hebei, Nanjing, Suzhou, Chengdu and Chongqing. According to the developer, it currently has a landbank of 4.3 million square metres which it says will enable the company to meet its development needs in China for the next three years.
In addition to its joint venture with Goodman for logistics projects, in March this year CPPIB announced that it had formed a JV with the country’s largest residential developer, China Vanke, to invest US$250 million in new residential projects in China.
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