GLP, Asia’s biggest warehouse developer and fund manager, on Tuesday announced the closing of its newly-established GLP China Income Fund II with capital commitments totalling RMB 5.8 billion ($900 million).
The core-plus logistics vehicle seeks to generate long-term, stable returns by investing in warehouse properties in prominent locations, the Singaporean firm said in a release.
GLP CIF II is seeded with a portfolio of 13 modern logistics assets in prime locations across the Yangtze River Delta, southern China and midwestern China. The vehicle is the second in a series of China-focused onshore income funds, following GLP CIF I’s final closing in April of last year with a total investment capacity of RMB 15 billion.
“We launched GLP China Income Fund II in response to investor demand for cash yields and access to GLP’s proprietary pipeline of high-quality, income-producing logistics assets,” said Teresa Zhuge, executive vice chairman of GLP China. “Fund management is an important and growing part of our business and we are committed to expanding this platform through further capital recycling initiatives and establishing new funds.”
Home-Grown Capital Raise
The backers of GLP CIF II comprise new and existing domestic institutional investors, the firm said without disclosing specific institutions. GLP has $20 billion in assets under management in logistics funds across income and development strategies in China.
At its final closing last April, GLP CIF I was fully seeded with 34 income-producing assets in 18 cities across China. The properties included assets from the warehouse specialist’s existing portfolios, including developments across the Yangtze River Delta, Beijing-Tianjin-Hebei and central China regions.
The closing of GLP CIF I came just over a year and a half after GLP teamed up with its former controlling stakeholder, Singapore sovereign fund GIC, to create the $2 billion GLP China Value-Add Venture II for acquiring logistics properties in mainland China. Before that, GLP had joined forces with mainland insurer China Life in early 2018 on the $1.6 billion GLP China Value-Add Venture I.
Mainland Sheds Appeal
GLP announced the closing for its core fund as China logistics continues to be one of the region’s most sought-after real estate investment opportunities and institutional players seek to reap the benefits of rental growth driven by the country’s burgeoning e-commerce sector.
At the end of March, Canada’s Quadreal Property Group announced that it had entered into a partnership with Warburg Pincus-backed warehouse developer New Ease to invest up to $1 billion in developing new logistics properties in China’s core markets.
Other fund managers have also committed fresh capital to mainland warehouse opportunities, including Singapore-based Keppel Capital, which earlier this year launched its first China-focused logistics property fund with an initial equity commitment of RMB 1.4 billion.
Last year, Chicago-based LaSalle Investment Management, which operates its own warehouse platform in Asia, announced a $681 million first closing of its LaSalle China Logistics Venture.
Investments such as these come as vacancy in Shanghai’s warehouse market fell by 1.3 percentage points in the first quarter to 6.8 percent, with rents climbing 2.1 percent compared with a year earlier, to reach an average of RMB 1.52 per square metre per day, according to a recent report by JLL.
GLP operates in Brazil, China, Europe, India, Japan, the US and Vietnam and has over $100 billion in assets under management in real estate and private equity. In China, GLP is the market leader in ground-up development and asset management of modern logistics real estate, the firm said.