Ivanhoé Cambridge, Logos Buy Melbourne Site for A$230M Project

Ivanhoé Cambridge and ARA Asset Management-backed Logos Property have acquired a site in northern Melbourne from local real estate investor Growthpoint for A$50.2 million ($36.4 million), the companies announced on 24 August.

The Canadian pension fund property investor and its Sydney-based partner are due to close on the purchase of the site in the industrial suburb of Broadmeadows on 4 September and construction is expected to start on the 120,000 square metre (1,291,669 square foot) complex in early 2021.

“This is a strategic acquisition for our business as a number of our existing customers have been looking to expand into the north of Melbourne, an area which has long experienced limited supply of prime grade logistics assets,” Logos’  head of Australia and New Zealand Darren Searle said in a statement.

Logos will act as manager and lead redevelopment of the 250,000 metre site, with the project expected to be valued at more than A$230 million once completed. The logistics developer and fund manager plans to construct a series of individually leasable warehouses on the site, ranging in size from 15,000 to 50,000 square metres, that will service the e-commerce, distribution, food and cold storage needs of client companies.

Located at 120 Northcorp Boulevard, the site offers access to the city’s Western Ring Road, Tullamarine Freeway and Hume Highway interchange – as well as connecting to Melbourne’s Eastern Freeway and Metropolitan Ring Road once the government’s planned North East Link project is completed in 2027.

Logos Heats Up in August

Logos’ purchase of what is currently a Woolworths distribution centre is its second acquisition in Melbourne this month after the company bought a site in the Victorian capital’s Epping suburb earlier in August with plans to develop a 46,240 square metre distribution centre.

Also this month the warehouse specialist reportedly spent A$170 million to acquire a pair of logistics facilities near Sydney from TCorp, an investment management division of the New South Wales government.

Earlier this year, the company had earlier picked up development sites in New South Wales and Queensland, as well as in Auckland, New Zealand, in addition to an earlier buy in Melbourne.

Just last week Logos added an eighth country to its APAC-focused portfolio when it announced the formation of a $350 million Vietnam joint venture with an unnamed sovereign wealth fund. That initiative is expected to announce the acquisition of its first site in the coming weeks.

Singapore’s ARA Asset Management acquired a majority stake in the Sydney-based developer in March this year, citing the company’s reputation as a “best in class logistics platform” as a motivating factor behind the deal.

Growthpoint said that proceeds from the sale of its Melbourne site to Logos will go towards repaying outstanding debts and CBRE helped facilitate the transaction.

“After reviewing our options for the site, we decided to sell this asset, as undertaking a lengthy development project was outside of our risk and return appetite in the current operating environment,” Growthpoint’s managing director Timothy Collyer said.

An Established Partnership

Logos and Ivanhoé Cambridge, a branch of Caisse de dépôt et placement du Québec, which manages public pension funds for the Canadian province, have collaborated in the past on a series of logistics investments in Asia Pacific, with the pension fund manager also holding a substantial stake in the warehouse specialist.

In April Ivanhoé Cambridge and Dutch institutional investor Bouwinvest teamed up with Logos for an $800 million joint venture in China aimed at developing new logistics projects around top tier mainland cities.

That agreement earlier this year marked the latest in a series of deals between Logos and Ivanhoe Cambridge which started in 2015, with the two firms forming a $400 million China-focused JV with CBRE Global Investors. Then in 2016 the Quebecois pension fund committed $110 million to Logos’ Southeast Asia Venture, before teaming up with CPPIB a year later to add an additional $484 million to the strategy as it expanded into Indonesia.

Ivanhoé Cambridge held C$64 billion ($47.9 billion) in real estate assets worldwide at the end of 2019, according to a company financial report.

Canadian Funds Yearn for Sheds

Ivanhoe Cambridge and its counterparts from other Canadian provinces are becoming ubiquitous figures in Asia Pacific warehouse deals as country’s pension funds are increasingly looking to logistics property investments as a dependable source of returns.

“We remain focused on assembling a sizable portfolio in Sydney and Melbourne, which has shown remarkable resilience through the COVID-19 pandemic,” noted Ivanhoé Cambridge senior VP for the APAC region George Agethen.

For its part, Ontario’s provincial pension fund manager OMERS scooped up a 7% stake in logistics developer ESR earlier in the year from Warburg Pincus after taking a cornerstone stake in the company’s $1.6 billion 2019 IPO.

Canada’s largest pension fund CPPIB has backed logistics investments in mainland China, Japan and Korea, including entering into a $2.29 billion European logistics joint venture with GLP in 2018.and also putting $700 million into GLP’s third Japan logistic fund that same year.