An investment fund belonging to LaSalle Investment Management has agreed to sell its 100 percent share in a 90,000 square metre warehouse project in Chengdu, Sichuan province, to Ping An Real Estate as demand for logistics assets in China continues to heat up.
The distribution centre, which is located in the Chengdu International Aviation Hub, includes six warehouses and one office building and five of the completed warehouses are nearly fully occupied.
Commenting on the investment firm’s decision to sell it’s southwestern China asset at this time, Eric Au, Regional Director for Greater China at LaSalle commented, “The divestment of this logistics site in Chengdu comes at a time when there is abundant tenant demand for modern logistics infrastructure in China driven by the country’s growth in domestic consumption, changes in consumption patterns, and the evolution of the consumer market.” The sale is being handled through the company’s LaSalle Asia Opportunity Fund III.
Logistics Sector Stays in the Spotlight
The rapid expansion of China’s retail industry, particularly the boom in ecommerce, has fueled demand for international grade logistics properties, and warehouse development has drawn significant investor interest in recent months.
Earlier this month Singapore’s Temasek Holdings and Hong Kong-based private equity firm RRJ Capital invested $250 million into warehouse developer Yupei. Prior to the Yupei investment, during February a Chinese consortium invested $2.51 billion into leading regional logistics developer Global Logistics Properties (GLP).
In 2013, Goldman Sachs agreed to provide a US$120 million pre-IPO loan to Shanghai-based start-up warehouse developer e-Shang, and earlier last year investor Sam Zell’s Equity International announced a strategic partnership with The Redwood Group to invest in logistics developments in China.
Insurance Companies Expand Their Role
Ping An is one of China’s largest insurance firms, and its real estate division has become increasingly active in building the state-run firm’s portfolio. Last year, Ping An helped to lead China’s charge into overseas real estate when it purchased the Lloyd’s Building in London for US$388 million. The company’s real estate division currently focuses on acquiring properties in tier-one and tier-two cities in China and has a diversified real estate portfolio, primarily including offices, retirement communities, mixed-use developments, industrial and logistic facilities.
LaSalle Asia Opportunity Fund III was launched in 2007 and raised a total of US$3 billion. It is the third in a line of successful opportunity funds launched by LaSalle focused on developed Asia, including China, Japan, Korea, Hong Kong and Singapore.