Hong Kong-based Baring Private Equity Asia (BPEA) Real Estate on Monday announced the closing of a capital raising for mainland warehouse platform Forest Logistics, bringing the total equity commitment to more than $1.2 billion amid a surge in capitalisation for Asia real estate investment strategies.
Established by BPEA Real Estate together with China industrial veterans Hank Hsu and Addy Chen in 2018, Forest develops and operates warehouses in gateway cities across China and will use the funds to build a network of more than 30 modern logistics properties in the country.
“China is the biggest Asian logistics market, and we have found excellent partners in Hank, Addy and the entire Forest Logistics team,” said Alex Tse, managing director at BPEA Real Estate. “With our private equity background and experience scaling companies in China, we will continue to support the Forest Logistics team in growing the company into one of China’s largest domestic logistics developers.”
The cash boosts Forest’s position in China’s logistics market after competitors LaSalle Investment Management and GLP both reached fresh funding milestones and e-commerce provider JD.com expanded its warehouse portfolio with a $513 million buyout of China Logistics Property Holdings, all since the first of September.
12 Projects in the Portfolio
Since BPEA Real Estate closed on $480 million in funding for Forest Logistics in May 2020, the mainland platform has gone on to acquire 12 projects representing 1 million square metres (10.8 million square feet) of gross lettable area, according to a press release.
Forest’s acquisitions to date include eight sites in Beijing, Shanghai, Xi’an and Chengdu with a combined gross floor area on completion of 683,000 square metres. Four of the projects are already operational, according to Forest’s website, with the company saying that all of its facilities incorporate environmental features and are ready for installation of technological infrastructure that caters to the future needs of tenants.
In Chengdu, its 96,698 square metre Forest Chengdu Qingbaijiang Logistics Park incorporates 7,200 square metres of cold storage space, while the company’s 70,868 square metre Forest Beijing Airport Logistics Park is set for occupancy in the third quarter of next year and is built to qualify for a LEED Gold certification for sustainability.
The Hong Kong private equity shop had invested an initial $300 million in Forest in 2018 and was able to raise $180 million of its 2020 tranche between January and March of that year, despite disruptions from the emerging COVID-19 pandemic.
One-quarter of the $480 million in 2020 equity came from BPEA Real Estate Fund II, which closed on $1 billion in total capital commitments in 2018, while the balance was provided by LP co-investors, Mingtiandi reported at the time.
More Asia Platforms to Come
With assets under management of $27 billion, including its strategies covering diversified pan-Asian real estate, BPEA and its real estate division appear ready to transplant their logistics success to more markets around the region.
“We hope to establish more logistics platforms in the coming years across Asia by leveraging our regional platform,” said Mark Fogle, head of BPEA Real Estate. “We also believe that China will continue to be an attractive place to invest across a range of different sectors and are actively seeking assets or companies with similar long-term growth prospects.”
Should the company succeed in moving from mainland China to other locations around the region, it would be taking on larger regional players such as ESR and GLP, both of which are familiar competitors from the mainland market.
Warehouse Gold Rush
The news of BPEA Real Estate’s latest closing comes as other fund managers are busy amassing war chests for a post-COVID buying spree across Asia Pacific.
In the China warehouse segment, Singapore-based GLP last month announced a first closing of its China Logistics Fund III at $1.75 billion, representing the lion’s share of the development vehicle’s $2 billion target. A week later, LaSalle Investment Management declared the $972 million final closing of the LaSalle China Logistics Venture fund, the Chicago-based fund manager’s first dedicated China logistics vehicle.
Last week, LaSalle rival CBRE Investment Management said it had received total capital commitments of $1.74 billion for the logistics-focused Asia Value Partners VI fund, which will pursue build- and reposition-to-core opportunities in APAC’s most developed and liquid markets.
Not conceding the race, LaSalle has raised close to $1.07 billion for its LaSalle Asia Opportunity VI, as divulged in a document issued by the Arkansas Teacher Retirement System, which has committed $50 million to the fund that is targeting office and logistics projects primarily in Japan and China.
In August, regional player ESR announced that it had raised $4 billion for a new development fund in China, with backing from the Netherlands’ APG Asset Management and Singapore sovereign wealth fund GIC.