CPPIB, QuadReal Set Up €2 Bil European Logistics JV with GLP

Canadian pension fund managers CPPIB and QuadReal, together with warehouse developer Global Logistic Properties, have established a €2 billion ($2.29 billion) venture to invest in European logistics facilities, the three companies revealed in a joint announcement today.

Together the partners are contributing €1 billion in equity to GLP Continental Europe Development Partners I (GLP CDP I), which will focus on developing modern logistics facilities in Germany, France, Italy, Spain, Netherlands and Belgium, according to the statement.

The investment expands the relationship between GLP, which handles $60 billion in assets and is one of the world’s largest logistics developers and CPPIB, which manages Canada’s public pension fund, with the pair now working together on a third continent, after the firm which is officially known as the Canada Pension Plan Investment Board,  has backed GLP ventures in Japan, India and North America.

The deal follows just over one year after GLP expanded its European presence with the $2.8 billion acquisition of UK-based warehouse developer Gazeley from Canada’s Brookfield Asset Management.

GLP Expands European Presence

“The proposed establishment of GLP CDP I reflects the confidence that institutional investors have in GLP and Gazeley, our Europe platform,” GLP co-founder and CEO Ming Mei said in the statement.

The company added that its first two European funds, GLP Europe Income Partners I (GLP EIP I) and GLP Europe Development Partners I (GLP EDP I) had closed in August this year after raising a total of $4 billion, with all funds now fully allocated.

Vancouver-based Quadreal, which manages the global real estate portfolio of British Columbia pension fund giant bcIMC, had been among the investors in GLP’s first two European funds, which were set up in tandem with the Singapore-based developer’s acquisition of Gazeley in October last year

The partners said they expect GLP CDP I to reach €2 billion in assets under management when fully invested, with CPPIB stepping up to contribute €450 million of equity to get the fund rolling. The financial commitments of the other two partners were not specified.

Leasing Success Leads to More Investment

According to the statement, Gazeley, which operates as GLP’s European unit, has signed more than 351,000 square metres (3.8 million square feet) of new leases since the beginning of 2018, to clients including Amazon, Kingfisher, Wayfair and Zeus Packaging.

“We expect GLP CDP I to grow quickly in scale and perform well over the long term given rising e-commerce sales and consumer demand for ever-shorter delivery times in Europe,” Andrea Orlandi, head of European real estate investments for CPPIB said in the statement.

The company says that it has started construction of over 550,000 square metres of new projects this year, at the same time that it has replenished its land bank.

Expanding on Existing Partnerships

The European deal comes less than two months after GLP stepped into a long-term partnership with CPPIB in India, together with the Canadian fund manager’s local partner Indospace. CPPIB had committed $500 million to the Indian logistics venture in 2017, although financial details of GLP’s involvement were not revealed.

In 2016, CPPIB and GLP had established a $2 billion Japanese joint venture to invest in warehouse projects in that country, just one year after the Canadian fund manager had invested $350 million to acquire a 10.6 percent stake in a GLP portfolio of US logistics assets.

With the establishment of GLP CDP I, GLP will have now have three funds in Europe which the company says will total more than €6 billion in assets under management when fully invested.