KKR, Abu Dhabi Fund Back A$1B Logos Development Venture in Australia

Logistics specialist Logos is getting some heavyweight backing for a new development venture in Australia, as the firm announced today that it has partnered with KKR and Abu Dhabi’s Mubadala Investment Company to take on a development project in Queensland state as an initial undertaking for the combined entity.

The US buyout giant and the $232 billion Emirati sovereign fund are investing with ARA Asset Management-backed Logos to develop an 18.2 hectare (45.2 acre) site in Brisbane’s Wacol area which the partners plan to transform into a master-planned estate worth more than A$200 million ($154 million), according to a statement.

The project at 3746 Ipswich Road in Brisbane’s southern fringes is the first step in a programmatic development venture which Mingtiandi understands could ultimately be valued at well more than A$1 billion ($772 million).

“We see the Wacol property as a strategic seed asset for this venture and are pleased to have facilitated this transaction from Fletcher Building, with whom we have a long-standing relationship,” said Darren Searle, head of Australia and New Zealand for the Sydney-based developer and fund manager.

Building Up in Brisbane

The venture’s initial project is located 23 kilometres (14.3 miles) south of central Brisbane at the interchange of the Ipswich and Logan Motorways, with Logos planning to redevelop the site from from ASX-listed developer Fletcher Building into 95,000 square metres (1 million square feet) of gross leaseable area.

Logos has commenced plans for the redevelopment, which is already partially leased. Once completed the project would join 47 Logistics Place in Larapinta and 2-6 Bishop Drive in Logos’ Brisbane portfolio, with the company having another four projects under development in Queensland state, according to its website.

A report released by CBRE earlier this year estimates that, based on forecast e-commerce sales, logistics investors in Australia will need to build another 350,000 square metres of new warehouses each year to meet demand from the country’s online shoppers, with Logos among a number of players seeking to fill that void.

Led by Greg Hyland, head of capital markets for Asia Pacific and Stuart McCann, head of international capital for the Pacific and Southeast Asia, CBRE Capital Advisors acted as financial advisor to Logos for the venture’s capital raising, with Hyland tying the strength of Australia’s warehouse market to rising investor interest in the asset class.

“We continue to see demand from investors to increase allocations to logistics investment around Asia Pacific, including a particular increase in interest in development-led strategies,” Hyland told Mingtiandi.

The veteran capital markets advisor linked investor willingness to take on development risk in the logistics sector to the shorter gestation period of warehouse projects, as well as the ability by established builders such as Logos to pre-lease a significant segment of their projects before completion.

Developing Partners

The new venture marks the first public announcement of a KKR investment with Logos, although the US private equity pioneer last month hired former Logos CEO Tom Lee as its new head of Australia and New Zealand real estate.

KKR is making the investment from its Asia Real Estate Partners strategy, the company’s first dedicated vehicle for investing in Asia Pacific property, which reached a final $1.7 billion close in January of this year with logistics playing a central role in the investment thesis.

Also showing a taste for sheds is Mubadala Investment Company, a four-year-old affiliate of Abu Dhabi’s Mubadala Petroleum which is tasked with making investments which help diversify the Emirate’s holdings.

Formed by the 2017 merger of Mubadala Development Company and the International Petroleum Investment Company (IPIC), the Abu Dhabi fund also has invested in logistics funds managed by JD Property, the real estate management unit of China’s JD.com, as well as having been a key backer of Softbank’s Vision Fund.