After raising $3.5 billion earlier this year to invest in real estate opportunities globally, Goldman Sachs Asset Management is taking aim at China’s warehouse sector.
In a joint announcement today, the asset management division of white-shoe investment bank Goldman Sachs said that it has established a joint venture with Shanghai-based developer Sun Jade to seek investment opportunities in logistics and other new infrastructure real estate assets in China’s top tier cities and the surrounding areas.
“Driven by economic expansion through the further acceleration of e-commerce, we are optimistic about the long-term growth prospects of the new infrastructure sector in China and globally,” said Takashi Murata, head of Asia Pacific real estate at Goldman Sachs Asset Management.
Relatively low profile in China’s warehouse world, since it was founded in 2017, Sunjade has assembled a portfolio of 11 projects, both completed and under construction, measuring more than 670,535 square metres (7.2 million square feet) according to its website.
Shanghai-Area Seed Portfolio
The joint venture partners are seeding their cooperation with a 240,000 square metre initial portfolio of four warehouse projects in the greater Shanghai area, according to the statement, with additional capital committed for future acquisition and development opportunities.
“China’s increasing share of global trade has resulted in significant growth in its e-commerce, industrial, smart logistics and big data sectors, spurring demand for infrastructure,” said Song Guoqing, founder and chief executive of Sun Jade. “Despite economic uncertainty due to the ongoing pandemic, new infrastructure assets have shown resilience, reflecting their importance as a key component of China’s future development and a driver of economic growth.”
Known in Chinese as 森瑶 (Senyao), all of Sun Jade’s projects are in communities surrounding Shanghai in the Yangtze River Delta, including six in the cities of Kunshan and Suzhou in Jiangsu province, and five in Jiaxing, Shaoxing and Ningbo in Zhejiang.
Of the 11 projects in Sun Jade’s portfolio, eight completed assets contribute 473,831 square metres of the company’s total space, with another three developments spanning 196,704 square metres still under construction.
The existing portfolio is primarily composed of multi-storey logistics facilities, both with and without ramps, with the company also managing some light industrial space. The two companies did not provide further information on which assets from Sun Jade’s portfolio were contributed to the joint venture.
Sun Jade’s Song previously co-founded a real estate firm called Ambition (安必信), which served as a strategic partner for LaSalle Investment Management, according to Sun Jade’s website. Also on the Sun Jade team is Kelvin Zhou, who formerly worked with Gaw Capital and ESR in China.
Sheds Earn Returns
The joint venture partners aim to capitalise on rising demand for “high-quality new infrastructure assets,” in China, with a particular focus on warehouses.
Pointing to market drivers such as e-commerce, growing domestic consumption, improving infrastructure and diversification of industrial requirements supported by government policies, Goldman Sachs Asset Management and Sun Jade join a host of warehouse ventures seeking returns in China’s logistics sector.
Goldman Sachs Asset Management had previously invested in China’s warehouse market in 2021, forming a $488 million joint venture with New Ease China, now part of DNE Group, to acquire a pair of portfolios of distribution assets.
DNE Group in September received government approval to form China’s first privately sponsored warehouse REIT, paving the way for the company to list assets from its warehouse joint ventures on the Shanghai stock exchange.
While investor interest in China’s residential and office sectors has cooled as the country’s financial crisis deepens, warehouse ventures have stayed steady, including Morgan Stanley’s purchase of four Yangtze River Delta logistics assets from Singapore’s SC Capital during the first half of this year.
In June, the world’s largest asset manager, BlackRock, broadened its exposure to China’s logistics sector by teaming up with local developer Chaintouch to begin developing a 190,000 square metre warehouse facility in Hebei province outside Beijing.
Then in July, Singapore’s GIC set up a joint venture with ESR to purchase 873,000 square metres of logistics assets from funds managed by the developer for $730 million.