Logos Group and CBRE Global Investors have reached a final close of RMB 5.5 billion ($786 million) on a China-focused logistics fund, according to a joint announcement.
The CBRE Logos China Logistics Club Fund will be operated as a partnership, with CBRE GI handling fund management and Logos taking charge of acquisitions, development, leasing and managing the assets, the companies said in a statement.
The vehicle, which will target income-producing logistics assets in major Chinese cities, drew commitments from eight undisclosed capital partners, three of which come from mainland China, and all of which are based in Asia Pacific, apart from CBRE Global Investors’ own Global Investment Partners Global Alpha Fund.
The announcement comes just under a month after Singapore’s ARA Asset Management acquired a majority stake in Logos for an undisclosed sum, and sees the warehouse developer linking up once more with CBRE GI after the pair joined with Ivanhoe Cambridge on their $400 million Logos China Logistics Venture (LCLV) in 2016.
Riding the Growth of China’s Spending Power
The CBRE Logos fund is targeting China’s logistics sector with a target of deploying more than two-thirds of its capital in the eastern and southern regions of the country as the continued growth of mainland e-commerce — fuelled by the growing spending power of mid-income households — is driving demand for warehouse space.
“This fund provides the opportunity to capitalise on compelling fundamentals in the China logistics sector which is underpinned by increasing domestic consumption, e-commerce, pent-up demand for quality warehouse facilities and China’s expanding middle class,” said Matthew Yao, head of China for CBRE Global Investors.
The investment manager, which has $113 billion in assets under management globally, highlighted in today’s announcement that its confidence in the sector remains intact, despite the on-going COVID-19 pandemic.
“Modern logistics which serves domestic demand has been our preferred structural investment theme for several years now,” said CBRE GI’s head of Asia Pacific strategy and research, Shane Taylor.
Just last month, the global investment manager closed on $900 million in equity comitments for its logistics-focused Asia Value Partners V fund. That investment vehicle is expected to have a total purchasing power of $2.3 billion after leverage, with up to 30 percent to be deployed in China.
Shopping Online as People Stay at Home
Taylor said in the company’s statement today that the recent pandemic had put CBRE GI’s conviction to the logistics sector to the “ultimate test”.
But with online shopping soaring as a result of stay-at-home orders around the world, the company said that a greater reliance on online consumption will translate into a continued demand for warehouse space.
“The relevance of this sector cannot be understated and the need for modern facilities in strong locations has again been made clear to us,” Taylor said.
Ramping Up in a Core Market
For Logos, which has operations across six countries in Asia Pacific, China is one of the company’s most important markets.
The firm has just under one million square metres (10.8 million square feet) of logistics space in the country across 9 properties, more than in any of the other geographies it operates in.
“China is a core market for Logos and we are pleased to be extending our strong relationship with CBRE Global Investors through this new fund,” said Daniel Cai, chief operations officer for Logos’ China business.
Logos is teeing up its continued growth in the country following ARA Asset Management’s acquisition of a controlling stake in the Australia-based logistics developer last month.
According to Mingtiandi sources, the Singapore firm now has a 70 percent ownership interest in the company, having bought the entire stake formerly held by Macquarie Infrastructure and Real Assets, in addition to part of the stakes owned by other shareholders including Ivanhoe Cambridge and founders Jon Marsh, Trent Iliffe and Stephen Hawkins.