Goldman Sachs is the fourth global investor to team up with mainland logistics developer New Ease this year, as the blue chip investment bank and the Warburg Pincus-backed real estate startup announced a $488 million China warehouse joint venture this week.
“We are excited to collaborate with Goldman Sachs, one of the world’s leading investors with deep industry insight,” said New Ease founder and chairman Sun Dongping. “We view the collaboration with Goldman Sachs Asset Management as recognition of New Ease’s capabilities and strong track record in developing first-class new economy infrastructure throughout China.”
Sun, who co-founded ESR predecessor e-Shang before establishing New Ease in 2018, had already notched investments with Singapore’s GIC, Canada’s Quadreal and US-based PGIM this year, before revealing this latest deal with Goldman Sachs Asset Management.
New Ease declined to specify the source of the assets for the joint venture, which are grouped into two portfolios. But the locations of the projects track closely with developments in the Shanghai-based firm’s existing pipeline, including facilities in Jiangsu, Henan, Hebei and Hubei provinces.
Tapping the Pipeline
The first collection seeded into the joint venture consists of an operational warehouse in the Henan provincial capital of Zhengzhou, as well as projects in the industrial hub of Kunshan — just west of Shanghai — and in the city of Sanhe in Hebei province that are expected to be completed during the fourth quarter of this year.
Mainland property listing websites show that New Ease currently has a 319,000 square metre project under development in Sanhe and the 75,000 square metre New Ease Kunshan Zhangpu Auto Parts Supply Chain base under construction in Kunshan. The company completed the 116,035 square metre New Ease Zhengzhou Smart Logistics Park in February 2020.
The second set of properties includes assets in Hebei and Hubei provinces that the partners say will be developed to meet rising demand from e-commerce companies and third-party logistics providers.
“The continued development of China’s economy, especially through the rapid pace of advanced digitalization of commerce, has further accelerated the development of the logistics warehousing industry and accompanying integrated services,” said Goldman Sachs Asset Management managing director Luke Wei.
Goldman Sachs and New Ease noted in the statement that the two companies would also look forward to exploring more cooperation opportunities beyond the two portfolios. In 2020, New Ease had established a joint venture with UK fund manager Actis at the start of the year, followed by a $600 million tie-up with JP Morgan Asset Management in May.
Established by Sun and US private equity major Warburg Pincus in 2018, New Ease manages a portfolio spanning over 6 million square metres (64.6 million square feet) of projects in operation or under development. The company has $5 billion in assets under management and multiple ventures with global investors.
In addition to pioneering e-Shang and New Ease, Sun also co-founded value-add commercial developer D&J China with Warburg Pincus in 2016. D&J went on to manage deals including the sale of a Beijing commercial complex to Allianz Real Estate and Alpha Investment Partners for $1.1 billion in 2019.
In March of this year, New Ease entered a partnership with Canadian pension fund manager QuadReal to invest in and develop logistics properties in Chinese cities, with a total equity commitment of up to $1 billion.
In June, US fund manager PGIM Real Estate announced an investment of $323 million to acquire warehouse projects from New Ease.