Singapore-listed Ascendas REIT is selling a logistics center just outside Shanghai to Goodman Group as the Australian industrial developer expands its China portfolio. Ascendas REIT, also known as A-REIT, said in a filing to the Singapore Stock Exchange last week that it would divest its entire equity interest in A-REIT Jiashan Logistics Centre for S$26 million (US$19.1). The transaction comes on the heels of A-REIT’s agreeing to divest a business park in Beijing, Ascendas Z-Link, for S$160 million (US$117.6 million) late last month.
The divestment of the logistics center in Zhejiang Province’s Jiashan County is intended to free up capital and strengthen the company’s ability “to look at other opportunities in Singapore, Australia and China,” said Chia Nam Toon, Executive Director and CEO of the Ascendas Funds Management, the REIT’s manager, in a statement to the Singapore Exchange.
A-REIT Down to Just One Mainland Asset
The divestments will downsize A-REIT’s portfolio in China from three properties to just one, a 79,800 square metre facility in Shanghai’s Jinqiao Export Processing Zone. Elsewhere in Asia Pacific, A-REIT has a portfolio of 103 properties in Singapore ranging from business parks and distribution centers to retail facilities, along with 27 logistics properties in Australia. The fund’s assets total roughly S$9.9 billion (US$7.3 billion) as of March 31.
Goodman Group’s purchase of the Jiashan facility fits into the developer’s plans in China, as double-digit retail and e-commerce growth drive demand for modern logistics facilities. In April, the company launched its 110,000 square metre Goodman Qingpu Centre in suburban Shanghai, a facility that was 97 percent leased upon completion, according to a statement from Goodman. The company’s global CEO told the media that Goodman has the capacity to develop up to 2 million more square metres of space across mainland China and Hong Kong, which would boost its current footprint by 63 percent.
China Ecommerce Boom Boosts Logistics Players
Big logistics players are benefitting from an influx of investment from pension funds and private equity firms into the booming China market. Goodman enjoys backing from the Canada Pension Plan Investment Board (CPPIB), which has a US$3.5 billion China logistics joint venture with the warehouse builder. The Canadian fund in November had also launched a US$500 million joint venture with Dutch pension fund manager APG Asset Management and Shanghai-based developer e-Shang (now e-Shang Redwood) to build warehouses across South Korea.
A-REIT, which is jointly owned by state-owned Temasek Holdings and JCT Corporation, stated that it expects to realise a gain of about S$5.1 million (US$3.7 million) on the disposal of the single-story, 35,729 square metre centre.