Singapore’s ARA Asset Management announced today that it has acquired a majority stake in Asia Pacific logistics real estate developer and fund manager Logos Group for an undisclosed sum.
The deal, which was revealed in a joint announcement by the Warburg Pincus-backed firm together with Logos and Canadian fund manager Ivanhoe Cambridge, provides ARA with control of one of Asia Pacific’s largest warehouse developers alongside the company’s existing collection of real estate investment trusts and private funds.
The new partners described the acquisition as creating “a best-in-class logistics real estate development and investment management platform,” as the industrial property sector grows in popularity with institutional investors.
Expanding an APAC Logistics Platform
“Logos is one of the largest and fastest growing logistics real estate players in the region with a strong track record and its fund products are highly complementary to those of ARA,” ARA Group CEO John Lim said in a statement. “We will be able to offer our investors a comprehensive set of investment vehicles across the risk spectrum to meet their investment needs in the logistics real estate space via the new platform.”
As part of the now-completed transaction, according to multiple sources who spoke with Mingtiandi, ARA has acquired the entire stake formerly held by Macquarie Infrastructure and Real Assets, the property investment unit of Australia’s Macquarie Group, which first backed Logos in 2014.
Other shareholders in the warehouse specialist, including founders Jon Marsh, Trent Iliffe and Stephen Hawkins, as well as Ivanhoe Cambridge, have sold part of their stakes to ARA, according to one market source who spoke with Mingtiandi, with the Singapore firm said to be holding around 70 percent of Logos after the deal.
“We look to expand our partnership with Logos throughout Asia Pacific as a best-in-class logistics real estate development and funds management platform,” ARA assistant group CEO and group chief investment officer Moses Song told Mingtiandi. “Growth prospects in the region for the logistics sector remain compelling, and we intend to capitalize on the opportunities created by this newly combined platform.”
Mingtiandi understands that Logos will continue to be managed independently of ARA’s other business units following the transaction. Logos is also expected to be managed independently of competing warehouse developer and fund manager ESR, which like ARA, counts US private equity firm Warburg Pincus as its largest shareholder.
Combining Development with Fund Management
Through the deal, which was approved by the Competition and Consumer Commission of Singapore (CCCS) last week, the fund manager has gained control of Logos’ existing portfolio and development pipeline in eight countries, which the parties project to cover five million square metres (54 million square feet) of space worth S$8.2 billion once completed.
Market analysts familiar with the two companies also pointed out that the deal combines a successful builder of warehouse projects with one of Asia’s most powerful real estate finance platforms.
“Perfect synergy,” noted Stuart Ross, head of industrial real estate for Southeast Asia at property consultancy JLL. “Logos is a successful developer and brings the development expertise necessary for ARA to get the most out of its logistics funds.”
Ross also pointed out that Logos has succeeded in establishing new development ventures in emerging markets including Vietnam and India, which could blend effectively with ARA’s existing positions in more developed markets. The deal is also seen as providing convenient exit opportunities for investors in Logos’ development ventures while providing access to new assets for ARA’s listed trusts and private funds.
“We hope to provide prospective investors a comprehensive suite of logistics real estate fund products across the risk spectrum to meet their investment needs, and also provide high quality occupier solutions for prospective tenants in our managed properties,” ARA’s Song added.
Before the deal, ARA already controlled Cache Logistics Trust, a ten-year-old Singapore-listed REIT which has a portfolio of 27 properties in Singapore and Australia worth S$1.26 billion ($910 million), according to its website.
In a prelude to the takeover, ARA had announced in December that it was selling its entire 10 percent stake in Cache Logistics Trust to Logos, with the trust manager also being transferred to the warehouse developer as part of the same S$77.6 million transaction.
Betting on Demand for More Sheds
“The logistics sector is undergoing significant growth and we are excited to be partnering with ARA to continue the expansion of Logos within all Asia Pacific markets,” Logos’ Joint Managing Director, Trent Iliffe said.
Founded in Australia by Iliffe and Jon Marsh in 2010, Logos expanded into China in 2012, with Stephen Hawkins establishing Southeast Asia operations in Singapore in 2016 as the company formed a series of partnerships and joint ventures with some of the world’s biggest fund managers.
Ivanhoe Cambridge, the real estate fund management division of Canada’s Caisse de Dépôt et Placement du Québec, first formed a $400 million China-focused joint venture with Logos and CBRE Global Investors in 2015. The Canadian giant, which held C$64 billion ($47.92 billion) in real estate assets as at December 31, 2019, followed up on that JV by investing in Logos at the corporate level in 2016.
In 2017 Logos established a $400 million India joint venture with the country’s Assetz Group, and followed up on that beachhead last year by spending $98.4 million to acquire a pair of logistics parks in Chennai.