Logos Group has reached a first close on its fourth China logistics venture, teaming up with a trio of global institutional investors to raise $800 million for warehouse developments across the country.
The Aussie logistics developer and fund manager announced today that it had established China Logistics Venture 4 in league with long-term partner Ivanhoé Cambridge, Dutch property fund manager Bouwinvest and an undisclosed investor from an Arab state which belongs to the Gulf Cooperation Council.
Logos announced its fund raising milestone less than two weeks after LaSalle Investment Management revealed that it had raised $681 million for a separate China warehouse development fund, with the two ventures together representing nearly $1.5 billion in fresh cash aimed at building new distribution centres on the mainland.
On Monday, Singapore-based warehouse specialist GLP announced a final close on its own RMB 15 billion ($2.1 billion) China core logistics fund.
Building on Proven Investment Strategies in China
The joint venture will develop institutional-grade facilities in key logistics markets serving Beijing, Shanghai, Guangzhou and selected markets in China’s midwest, according to the announcement.
Although Logos and Ivanhoé Cambridge did not disclose details of their equity commitments to the joint venture, Bouwinvest revealed in a separate announcement today that it had committed $100 million to China Logistics Venture 4 under its Asia Pacific investment mandate.
Logos said China Logistics Venture 4 builds on the “proven and successful strategies” of Logos and Ivanhoé Cambridge’s previous three joint ventures in China, which have raised publicly announced commitments of over $1.6 billion.
“We are pleased to have again extended our relationship with Ivanhoé Cambridge in China and also welcome Dutch institutional investor Bouwinvest and a new GCC-based investment partner for this venture,” said Logos managing director and co-CEO, John Marsh.
Aiming to develop a portfolio of facilities targeting third party logistics and industrial tenants which service domestic consumption and e-commerce markets, the investment programme will kick off when China’s market conditions stabilise following COVID-19, according to the announcement.
“Our partners’ strong interest in this venture is testament to the continued growth story of this market, which is coming back into full operation following COVID-19, and Logos’ proven track record in China,” Marsh said.
Banking on E-commerce to Drive Warehouse Demand
With China gradually returning to work after the countrywide lockdown, Logos highlighted the strength of the logistics sector in the country, which it says is underpinned by the significant growth in e-commerce.
With traditional retail hit by restrictions on movement put in place due to the pandemic, e-commerce has emerged as a “safe and convenient” alternative to bricks-and-mortar venues, the warehouse developer said.
Chief operations officer Daniel Cai noted that Logos’ portfolio had remained resilient during the pandemic, which he attributed to the strength of domestic consumption in China, adding that the domestic market was a key focus for the company.
During the first three months of 2020, online sales of physical goods in mainland China totalled RMB 1.85 billion, according to the country’s National Bureau of Statistics. Despite the economic impact of the COVID-19 crisis, that amount was an increase of 5.9 percent over the total transacted online during the same period last year.
Drawing Investment from Long-term Partners
The establishment of China Logistics Venture 4 comes two and a half years after Logos closed its previous China logistics venture, which saw the developer partner with Ivanhoé Cambridge and Denmark’s largest commercial retirement fund manager, PFA Pension.
That $830 million close continued Logos’ relationship with Ivanhoé Cambridge, which extends back to 2015 when the Canadian fund manager partnered with the warehouse developer and CBRE Global Investment Partners to commit $400 million to the Aussie firm’s first China venture.
90 percent of the equity raised for Logos China Logistics Venture 3 has now been committed, and Logos’ Cai explained to Mingtiandi that land had been acquired and cleared for 11 properties which are projected to yield a total gross floor area of approximately 1.1 million square metres.
“The continued solid performance of our previous three China ventures and current market conditions makes this the right time for Ivanhoé Cambridge to further invest in this market with Logos,” said Ivanhoé Cambridge’s senior vice president for Asia Pacific, George Agethen, who added that the JV had been structured to capture opportunities “as we cautiously emerge from the COVID-19 crisis”.
Switching from Singapore to China
As for Bouwinvest, the commitment comes as it aims to grow its Asia-Pacific portfolio to around €1.7 billion ($1.8 billion) in invested capital by the end of 2022.
“We are pleased to expand our logistics portfolio in the region with Logos and believe long-term fundamentals in China are compelling while current market conditions and the way the venture is set-up will enable us to secure attractive opportunities for logistics development,” said Tjarko Edzes, who heads Bouwinvest Asia-Pacific Investments.
Bouwinvest’s commitment follows a €48 million investment in January last year, representing a 24.5 percent stake, in Logos’ acquisition of a Singapore industrial project said to have a projected value on completion of more than S$585 million.
The Dutch fund manager joined investors Ivanhoé Cambridge, CPPIB and LaSalle GPS in the joint venture, although further details of the transaction have not been made publicly available.