GIC Commits to A$2B Aussie Logistics Platform

Singapore’s sovereign wealth fund, GIC, announced on Monday that it has set up a A$2 billion ($1.44 billion) unlisted trust with Australian REIT, Dexus, to invest in logistics properties down under.

Subject to approval, GIC will be the foundation investor in Dexus Australian Logistics Trust (DALT), taking 25 percent of the core portfolio, with rights to acquire an additional 24 percent by June 2020. Partner firm REIT Dexus will initially hold the other 75 percent, according to a company statement.

The $2 billion logistics investment in Australia comes just over two months after GIC committed $2 billion to warehouses in mainland China, through an investment in a fund managed by Global Logistic Properties.

GIC Bets on E-Commerce Boom in Oz

Lee Kok Sun, Chief Investment Officer, Real Estate, said GIC believes Australia’s favourable demographics and growth in e-commerce, will continue to drive demand for logistics properties. “This portfolio of quality assets in strong locations is well-positioned to capitalise on this and generate steady income over the long term,” he noted.

The trust will pursue an acquisition and development strategy targeting core logistics properties in Australia, according to GIC, and will be seeded with a logistics portfolio comprising mostly core facilities in “strong performing precincts” with “good access” to major arterial roads, rails and ports, mostly in Sydney and Melbourne.

The Singaporean sovereign wealth fund said that it is taking a 49 percent interest in the seed portfolio, which was valued at A$1.4 billion. The weighted average lease expiry for the existing assets is 5.3 years with occupancy at 98 percent.

In addition, the joint venture will acquire three development opportunities expected to have a total future completion value of A$500 million, and will continue to target core logistics properties in Australia, added GIC.

Aussie Deal Follows China Investment

GIC’s link-up with Dexus came just two months after the Singapore institutions struck its partnership with GLP to establish a US$2 billion fund with a focus on acquiring income-generating logistics facilities in China.

In early 2017 the sovereign fund travelled to Europe in search of warehouse opportunities, where it closed on its €2.4 billion (then $2.7 million) acquisition of European warehouse platform P3 from TPG Real Estate and Ivanhoe Cambridge.

In mid-2016 GIC also committed to Korean logistics opportunities via an investment in a fund managed by ADF Asset Management.

Sheds Now in Style

Other institutional investors are also showing keen interest in logistics assets, which are seen as a primary beneficiary of the booming e-commerce industry, underpinned by middle class consumption and infrastructure build-out.

Last week alone, Allianz Real Estate, the real estate investment management division of German insurer Allianz Group, announced it had acquired a 50 percent stake in a portfolio of mainland China logistics assets from a joint venture between Vailog China and Hong Kong’s Gaw Capital Partners. The Munich-based firm also committed to a 50 percent stake in a $1 billion India logistics platform with pan-Asian logistics group ESR.

Earlier this month, Canadian pension fund manager CPPIB tied up with GLP and Canadian firm QuadReal Property Group to establish a $2.29 billion fund to invest in logistics properties in Europe.

GIC does not publicly disclose details of its total holdings, however, according to the US-based Sovereign Wealth Fund Institute, the fund had $390 billion of assets under management as at end-June 2018.

Australia-listed Dexus directly owns A$12.2 billion of office and industrial properties in Australia and manages a further A$12.7 billion of office, retail, industrial and healthcare properties for third party clients.