Asia’s logistics real estate developers continue to be targetted by global investment heavyweights as Canada’s Ivanhoe Cambridge and Australia’s Macquarie Group have announced that they are making a joint offer to take over Logos Property Group, a warehouse builder with a portfolio spanning China and Australia.
The takeover bid comes less than one month after Shanghai-based e-Shang and Singapore’s Redwood Group merged in a non-cash deal to form one of the region’s largest logistics real estate platforms. That merger was followed by a Dutch pension fund PGGM committing another $160 million to Redwood’s platform at the end of January.
Warehouse projects have been enjoying strong returns in Asia as the region’s ecommerce sector takes off. The logistics sector is also seen as a source of more dependable cash flows as some other businesses in the region face fears of being buffeted by some of the recent currency and stock market gyrations.
Ivanhoe and Macquarie Send Notice to the European Commission
The bid by Ivanhoe Cambridge and Macquarie to take over Logos came to light after the two companies notified the European Commission of their objectives to jointly acquire both Logos Australia and Logos China on January 29th, according to a published account. The deal requires approval by the European regulator before it can be finalised.
The two investors have not commented on the deal and no price has been revealed for the offer. Logos portfolio of assets across the two countries has been valued at A$2 billion ($1.4 billion).
Investors Bid to Become Owners
Logos, which was founded in 2010 by veteran real estate executives Trent Iliffe and John Marsh, has grown rapidly in both China and Australia, attracting support from investors, including Macquarie and Ivanhoe Cambridge along the way.
Early on the company gained support from Singapore sovereign wealth fund GIC – also a major backer of market leader Global Logistics Properties – and Macquarie Capital first invested in 2014.
Last year Macquarie assisted Logos in forming a $400 million China joint venture with Ivanhoe, a unit of Canada’s Caisse de dépôt et placement du Québec, and CBRE Global Investment Partners.
Now Macquarie and Ivanhoe seem to like their partners well enough to buy them out entirely.
Ecommerce and IPOs
The high level of investor interest in what is usually seen as among the less glamorous real estate sectors is in no small part driven by the demand for large distribution centres to help support the expansion of ecommerce in the region.
China’s online sector sold RMB 3.9 trillion in goods last year, a one-third increase over 2014, according to China’s National Bureau of Statistics, and this breakneck expansion is helping to fill new warehouses and raise rental rates.
Global Logistic Properties, or GLP, managed a S$3.45 billion IPO in 2010 based on the performance of its Chinese and Japanese warehouse assets, and the newly merged e-Shang Redwood is said to be targettting their own IPO of well north of $1 billion within one year’s time.
While Ivanhoe Cambridge and Macquarie have not yet commented on their own longer term intentions, a similar stock listing could well be on the way.