BlackRock is taking on a 190,000 square metre (2 million square foot) development project outside of Beijing as the investment manager expands its exposure to China’s logistics real estate sector.
The US asset management giant is developing the distribution centre in Hebei province together with Chaintouch China, with the partners kicking off what it is envisioned as a long term cooperation in the sector, according to an announcement by the Shanghai-based firm on Thursday.
“The ongoing growth of China’s e-commerce sector, and the advantages of this site just outside of Beijing, give us confidence that this project will achieve robust returns for our company and for our partners,” Chaintouch founder Wonder Wang told Mingtiandi. “We are pleased to welcome BlackRock as our latest partner and look forward to expanding this cooperation.” BlackRock representatives declined to comment on the transaction.
BlackRock’s share of the equity in the venture, which is understood to be more than 90 percent of the project total, comes from its BlackRock Asia Property Fund V vehicle, which closed on $1.2 billion in cash during March last year. The fund manager had invested an undisclosed amount in projects owned by funds managed by China cold chain operator Metcold during mid-2021, but the cooperation with Chaintouch is said to be its first commitment to ambient distribution facilities on the mainland.
Kicking Off a Platform
BlackRock and Chaintouch have now acquired the site for the project, which is estimated to span approximately 120,000 square metres, and plan to break ground in the third quarter of this year. The partners expect to complete the distribution centre in 2024.
Chaintouch, which will take a single-digit equity stake in the venture, will be responsible for development management, leasing and asset management for the project following completion.
Sources familiar with the transaction said that the partners expect to announce additional deals, including a “landmark transaction” in the coming months, as they work together to develop a logistics platform on the mainland.
In its statement, Chinatouch noted that, “As an important element in China’s ongoing urbanization and infrastructure development, logistics and warehousing projects are increasingly favoured by investors for both their returns and their benefits to society.” The firm noted that since the dawn of the pandemic, the need for modern warehouse facilities has become more urgent.
In addition to its investment in Metcold’s temperature-controlled facilities in May last year, BlackRock has been a major investor in Shanghai’s commercial real estate sector, including paying $184 million to purchase a pair of office buildings in the city’s Putuo district in 2018.
Working with the Big Leaguers
Founded by former JLL and Logos executive Wonder Wang more than eight years ago, Chaintouch has managed logistics projects measuring more than four million square metres and valued at over $3 billion, according to its statement.
Having previously worked with investors including Goldman Sachs, Blackstone and Morgan Stanley, the company lists for lease eight projects around China, including facilities in Shanghai, Jiangsu and Zhejiang province in the Yangtze River Delta, as well as assets in Wuhan, Chengdu and Zhengzhou in Henan province.
With China’s e-commerce sector expected to notch $1.54 billion in revenues this year, investors purchased $5.8 billion in income-earning mainland logistics assets during 2021, making it the most active market in Asia Pacific for warehouse properties, according to figures from MSCI.
Just last month a division of Hong Kong’s New World Group agreed to pay $337 million to purchase six western China warehouses from Goodman Group and Singapore’s SC Capital said in the closing days of May that it had sold four Shanghai area distribution facilities to Morgan Stanley.
Note: this story has been updated to show that SC Capital sold the four Shanghai area sheds to Morgan Stanley. An earlier version had reversed the vendor-buyer identities. Mingtiandi apologises for working late again.