Asia’s largest warehouse developer and fund manager, GLP, has reached a final close on its latest China-focused investment vehicle, locking in investor commitments despite the uncertainty caused by the COVID-19 pandemic.
The Singapore-based firm, which has a global portfolio worth $89 billion, announced today that it has reached a final close for its GLP China Income Fund I (GLP CIF I) a new fund with a total investment capacity of RMB 15 billion ($2.1 billion) in assets under management.
While GLP had traditionally disclosed details of capital raised during earlier fund initiatives, the company declined to reveal fresh cash commitments relevant to the CIF I initiative in response to queries from Mingtiandi.
GLP said CIF I is fully-seeded with 34 income-producing assets in 18 cities across China, with Mingtiandi coming to understand that the properties are composed of balance sheet assets from the warehouse specialist’s existing portfolios, including developments located across the Yangtze River Delta, Beijing-Tianjin-Hebei and Central China regions.
The close of CIF I comes just over a year and a half after the firm, which has a global portfolio spanning 62 million square metres (667 million square feet), teamed up with GIC to create a $2 billion value-add partnership for acquiring logistics properties in mainland China.
Signing Up New Investors
Of the seven institutional investors in the new fund, all are from mainland China and six are new to GLP, demonstrating what the firm says is the “continued demand by investors for logistics sector opportunities”.
Mingtiandi has learned that over half of the capital raised was committed in the first close last October, while the remainder was committed between January and March this year.
“Despite the current environment, we received significant interest from institutional investors to participate in GLP CIF I,” said Teresa Zhuge, executive vice chairman of GLP China.
With the COVID-19 pandemic locking down China during much of the fund-raising period, to get around travel restrictions GLP for the first time ever provided investors with virtual tours of projects instead of live site visits, a source close to the fund raise told Mingtiandi.
Zeroing in on China as E-commerce Drives Demand for Logistics
GLP said it was targeting China as the largest “consumption opportunity in the world with an advanced and rapidly-growing e-commerce market”.
Zhuge said that investor demand for logistics assets in China is exceptionally strong, while the interest in the firm’s latest fund was a reflection on “GLP’s high-quality, modern logistics assets and our fund management and operational capabilities, which allow us to drive value through all phases of the asset life cycle”.
A source close to the fund raise told Mingtiandi that GLP’s global business had seen some increase in demand for short-term space to meet demand from e-commerce, grocery and pharmaceutical segments since the outbreak of COVID-19.
Adding to a Collection of China Funds
GLP is continuing to add to its China-focused funds platform, building up a growing institutional investor base that includes some mainland China investment powerhouses.
Prior to bringing GIC on board for China Value-Add Venture II, GLP teamed up with China Life for its first value-add fund, which was established just over two years ago.
The state-owned insurer together with the developer committed RMB 10 billion to that vehicle, which was set up to acquire completed logistics and industrial properties across the country.
China Life, which bills itself as mainland China’s largest commercial insurance group, is believed to have been an investor in GLP since 2014.
During 2015, China Life committed more than $1 billion to buy a 30 percent stake in the 58 million square foot (5.4 million square meter) portfolio of US warehouses GLP had acquired from Denver-based Industrial Income Trust for $4.55 billion in July 2015.
In 2017, CEO Ming Mei led a management buyout that saw a consortium of primarily mainland investors including China Vanke, Hillhouse Capital, HOPU Investments and an affiliate of Bank of China take GLP private in a $11.6 billion transaction.