GIC Pays A$366M to Boost Stake in A$2B Aussie Logistics Trust

GIC has entered 2020 with an A$366.1 million ($253 million) logistics investment, as the Singaporean sovereign wealth fund bets on warehouses for the new year.

The $100 billion fund made its investment by acquiring an additional 24 percent stake in Dexus Australian Logistics Trust (DALT), according to a stock exchange disclosure by the manager of the unlisted trust, increasing GIC’s interest in the vehicle to 49 percent.

The acquisition comes just over a year after the unlisted trust was set up as a joint venture between GIC and Australia’s Dexus REIT, with the sovereign wealth fund initially taking a quarter stake in the investment entity with put and call rights to acquire an additional 24 percent by June this year.

Targeting Aussie Logistics

The trust has an active acquisition and development mandate targeting core logistics properties in strong performing areas of Australia with good access to transport networks, according to Dexus.

To follow through on that strategy, the trust eight months ago paid A$26.5 million for a 9.2 hectare (2.5 acre) site at 425-479 Freeman Road in the suburbs of the Queensland capital of Brisbane, which it plans to transform into a 55,000 square metre logistics facility.

Dexus said in its bourse filing that GIC had exercised its second tranche rights to make the acquisition, reducing the Aussie entity’s ownership stake to 51 percent, without providing a rationale for the investment. GIC has not commented publicly on the transaction.

That Queensland facility adds to the close to A$2 billion in Australian logistics assets which Dexus used to seed the joint venture when the open-ended trust was established in November 2018.

Comprising A$1.4 billion of completed properties and a development land bank worth A$500 million on completion, Dexus said at the time that the portfolio had a weighted average lease expiry of just over five and average occupancy by income of 98 percent.

With 97 percent of the assets in the Sydney and Melbourne markets, Dexus said the portfolio is weighted to traditional logistics facilities leveraged to the growth of e-commerce.

In addition to its Queensland acquisition, since 2018 the DALT trust has moved closer to completing a 35,300 square metre (379,966 square foot) logistics development in the Melbourne suburb of Ravenhall. That A$83 million asset from the trust’s seed portfolio is now pre-leased to a food processor and distributor starting from September, when it is expected to be ready for occupancy.

Increasing the Global Reach of GIC’s Portfolio

GIC is increasing its exposure to Australian logistics just three weeks after it purchased a one million square metre portfolio of logistics assets in Europe from Apollo Global Management.

The sovereign fund paid €950 million for that set of 28 logistics facilities in Austria, Belgium, Germany, the Netherlands, Poland and Slovakia.

At the time of that European deal, GIC said that it intends to integrate its new continental portfolio into its existing pan-European warehouse platform P3 Logistic Parks, which it acquired from TPG Real Estate and Ivanhoé Cambridge in 2016 for €2.4 billion.

Aussie Logistics Attracting Overseas Interest

The Singaporean fund is not the only Asia-based investor with an appetite for Australian industrial and logistics assets.

Just under a month ago, Hong Kong-listed logistics specialist ESR announced an A$138 million mandate to raise fresh capital by offering investors access to a set of its Australian business parks and other logistics assets.

One month prior to that announcement, the Warburg Pincus-backed company established a A$350 million mandate with China Merchants Capital to invest in logistics assets down under.