Goodman Signs 3 New Leases in China and Prices $400M Note

Australian real estate developer Goodman Group scored three new warehouse leases and a successful round of debt financing as the company continues to profit from Greater China’s rapidly growing logistics sector.

Last week the company’s Goodman Hong Kong Logistics Fund (GHKLF) announced that it had successfully priced its inaugural US$400 million Euro Medium Term Note issuance. According to statement from Goodman, the bond issue was over 4.5 times oversubscribed, and the company intends to use the proceeds of the notes to pay down existing debt facilities.

Commenting on the successful round of refinancing, Philip Pearce, Managing Director Greater China for Goodman, said, “The notes issuance is an important step for GHKLF to optimise its financing structure following the recent portfolio expansion. It is consistent with GHKLF’s debt strategy of extending debt maturities and diversifying funding sources.”

As at 31 March 2014, GHKLF had an asset portfolio of HK$19.2 billion, and the fund had received a “BBB+” long term corporate credit rating by Standard & Poor’s, with a “Stable” outlook.

Goodman Leases Warehouse Space to Leyou and SF Express

In addition to refinancing its Hong Kong operations, Goodman has also been active this month in leasing out warehouse space to baby products retailer Leyou, and delivery service SF Express.

On Monday the developer announced that it had signed a deal with Leyou to lease out 23,057 sqm of warehouse space at its Goodman Landport Logistics Estate in Tianjin’s Beichen District. The deal calls for Leyou to take up 11,527 sqm of space in the planned project’s 59,043 sqm initial phase, to be followed by another 11,530 sqm in the 45,888 sqm second phase.

The agreement with the infant products retailer follows only a few days after Goodman announced that SF Express, whose delivery services help fulfill many of China’s surging ecommerce transactions had leased a combined 18,000 sqm of space in Phase 1 of the same Landport Logistics Estate in Tianjin.

The contract with SF Express came in addition to an agreement signed just two months earlier, when the delivery services provider signed up to occupy 6,000 sqm of warehouse facilities in the Tianjin distribution centre.

Goodman is expanding its footprint in China at a rapid pace. Currently the Group has more than 780,000 sqm of developments in progress in key cities including Shanghai, Tianjin, Chengdu, Chongqing, Langfang, Changzhou and Hefei, and a development target of 800,000 sqm for the next 12 months.

China Logistics Real Estate on the Rise

The rapid growth of China’s retail sector, particularly in ecommerce, is helping to fuel demand for international-grade warehouse space, and has created a shortage of available distribution centres.

A report published by consultancy Jones Lang LaSalle in September last year found that the growth of China’s e-commerce market “makes the logistics sector the most attractive real estate opportunity in China.”

The demand for more shelf space is pushing up logistics land costs, especially around major urban centres. In a report published earlier this year by Cushman & Wakefield, the real estate consultancy found that land prices have risen 20-30 percent around Shanghai in the last two years.