Goodman Sells Mainland Logistics Portfolio to China Everbright PE Division

Australian industrial developer Goodman Group has sold a portfolio of seven Chinese logistics assets to the real estate private equity arm of China Everbright Limited. While no financial terms were disclosed, the deal for around nine percent of Goodman’s total assets under management in Greater China, is said to represent the largest-ever sale of grade A logistics assets in the country.

The properties have a total leasable area of over 320,000 square metres and are spread across the cities of Kunshan, Jiaxing and Wuxi near Shanghai; Qingdao in eastern China; Xi’an in northwest China; and Shenyang in northeast China. Global brokerage JLL acted as sole agent assisting Goodman in the equity transaction.

Goodman declined to comment. The buyer, EBA Investments, is the real estate private equity arm of Hong Kong-listed China Everbright Limited, which is part of the Beijing-based financial conglomerate China Everbright Group.

Goodman Capitalises on Logistics Demand

Goodman entered the China market in 2001 and has since built a portfolio spanning 3.6 million square meters of logistics space in the mainland and Hong Kong as of late last year. The company is estimated to be the second-largest warehouse provider in the country, behind Singapore-based GLP. Goodman officials declined to comment on the transaction when contacted by Mingtiandi.

Stuart Ross, JLL’s Head of Industrial for China and Shanghai, commented in a statement that Goodman’s newly traded set of warehouses attracted more bids than its previous portfolio offering. The strong response was driven by sustained foreign demand, as well as domestic institutional investors’ growing appetite for high-quality core logistics assets.

Goodman put a four-asset portfolio on the market in mid-2015, three of which were snapped up within a few months, according to JLL. The rapid growth of e-commerce combined with tight supply in first- and second-tier cities continues to draw investors to the asset class.

“Although the overall cost of capital [for logistics investments] has increased since the third quarter of 2017, the rents and asset values of logistics real estate are rising,” commented Johnny Shao, who leads JLL’s East China capital markets advisory team.

Mainland and Global Investors Seek More Sheds

The deal with Goodman deepens China Everbright’s involvement in the country’s fast-growing logistics sector. The financial services heavyweight joined a consortium of top mainland finance firms for a $300 million round of investment in regional logistics builder e-Shang Redwood (ESR), announced in January of last year.

Goodman’s China ventures are backed by global investors, primarily the Canadian Pension Plan Investment Board (CPPIB), which owns 80 percent of the Goodman China Logistics Partnership (GCLP). The venture had $2.1 billion in assets across the mainland as of last June.

The Canadian fund management giant has also partnered with Goodman on its 13-asset Hong Kong warehouse development scheme. Last month, CPPIB invested $248 million to take an unspecified stake in the vehicle, the Goodman Hong Kong Logistics Partnership (GHKLP).

Goodman’s China logistics ventures are also backed by mainland sovereign wealth fund China Investment Corporation (CIC).