CPPIB Invests $248M in Goodman Hong Kong Logistics Fund

The Canada Pension Plan Investment Board (CPPIB) is expanding its Asia logistics partnership with Australia’s Goodman by investing HK$1.94 billion ($248 million) in a Hong Kong warehouse development scheme first established by the Australian builder in 2006.

The investment will earn the global fund management giant an unspecified stake in Hong Kong’s largest industrial vehicle Goodman Hong Kong Logistics Partnership (GHKLP), which currently has a portfolio of 13 assets totalling HK$28.7 billion ($3.68 billion).

The Hong Kong deal is the latest in a series of investments by CPPIB into Goodman’s Greater China initiatives, as the Toronto-based pension fund manager continues to look to Asia for returns.

CPPIB Boosts Exposure to Hong Kong Sheds

“There is tremendous opportunity for growth across the logistics sector in Hong Kong, which benefits from growing domestic consumption and the city’s strategic position as a gateway into China,” commented Jimmy Phua, CPPIB’s Head of Real Estate Investments Asia in a statement announcing the deal today.

The unlisted Hong Kong Logistics Partnership includes a 50 percent interest in the 224,000 sqm (2.4 million sq ft) Goodman Interlink development, which the fund already co-owned with CPPIB under a 50/50 joint venture. CPPIB had bought out Goodman’s 50 percent stake in the Interlink project in 2011, before the 24-level project was completed in 2012.

“We are pleased to deepen our excellent global relationship with Goodman through this investment in GHKLP, while at the same time increasing our exposure to the fast-growing logistics sector,” he added.

The city-wide portfolio boasts an occupancy rate of 98.5 percent with a weighted average cap rate of 5.1 percent as of September 30, according to Goodman’s corporate website. The assets of the core-plus venture include a 50 percent controlling stake in Hong Kong’s Container Terminal 3.

Goodman Ploughs Ahead in Greater China

CPPIB, which manages roughly a quarter of a trillion dollars in retirement funds, has also worked with Goodman on warehouse investments north of the border, where the duo set up the Goodman China Logistics Partnership (GCLP) in 2009.

The partners have committed over $2 billion of equity to the 80/20 joint venture to date, most recently adding $1.25 billion in December 2015. The platform, in which CPPIB owns an 80 percent stake, holds 48 logistics estates with over 4.2 million square metres across 19 markets in mainland China as of June.

Sydney-headquartered Goodman is on a roll in Greater China, having recently marked another milestone with the opening of the Goodman Huiyang Industrial Park in Guangdong Province, a fully leased, 150,000 square metre logistics and distribution facility inside the Huiyang Economic Zone.

The developer has leased one million square metres of logistics space over the past 12 months, bringing its China portfolio to over 98 percent occupancy. Goodman has a network of over 2.4 million square metres of managed properties in the country, after completing a number of developments in gateway cities over the past year.

Canadian Fund Takes Aim at Asian Logistics

CPPIB’s new Hong Kong investment with Goodman comes in the same year that the Canadian fund manager ventured into India’s warehouse sector by investing $500 million in a joint venture with logistics platform IndoSpace in May.

That deal followed two months after CPPIB’s $242 million investment into a $484 million joint venture with Ivanhoé Cambridge and Logos Property to develop and acquire logistics properties in southeast Asia.

The institutional investor has also bought into logistics assets elsewhere in the world, partnering with with Goodman and APG Asset Management in 2015 to launch a more than £1 billion ($1.5 billion) logistics platform in the UK.