Logistics development specialist Logos Property has entered the Vietnam market with a $350 million joint venture with an unnamed global institutional investor, according to an announcement by the Sydney-based firm today.
The ARA Asset Management-backed warehouse builder and fund manager, together with its partner, plans to develop a portfolio of logistics facilities across Ho Chi Minh City, Hanoi and the Greater Danang area, Logos co-founder and managing director Trent Iliffe told Mingtiandi in an exclusive interview.
The company expects to break ground on multiple projects during 2021 with Iliffe expecting that Logos will have up to $2 billion in assets under management in the fast-growing Southeast Asian country within the next three to five years spurred by manufacturing growth and e-commerce development.
Responding to Customer Demand
“The reason that we first began looking at Vietnam was that we had one of our regional customers which a few years ago began drawing up plans for moving production to the country,” Iliffe explained. “Logistics customers there need better assets and managers that are going to be there and will help them grow.”
To meet that demand Logos and its partner aim to build a porfolio of logistics facilities to serve local and international customers from manufacturing, e-commerce and other sectors across Vietnam. Today’s initiative marks Logos’ fourth new venture this year
Iliffe expects Logos’ customer base in Vietnam to be evenly split among manufacturers and e-commerce firms, but noted the impact of trade wars and the Covid-19 crisis in pushing supply chain managers to reduce their reliance on any single market.
“Our venture is off the back of growth in manufacturing in Vietnam,” Iliffe said. “The trade war has been a big factor, and the pandemic has been another big reason for manufacturers to diversify into additional locations, so from a location perspective it makes sense.”
Click here to see Logos’ Peter Garrison discuss Vietnam opportunities in Mingtiandi’s July logistics forum
Logos has identified a set of target development sites for the venture and expects to acquire land from this pipeline in the coming months. The company plans to have 95 percent of its Vietnam facilities in Hanoi and Ho Chi Minh City with the portfolio expected to be evenly split between the two population centres.
The company plans to have warehouses ready for occupation within the next 12 to 18 months, with the projects being developed both on a speculative and build-to-suit basis.
Moving into a New Market
In January Logos hired former PwC executive Glenn Hughes as its head of Vietnam with the developer’s expansion adding a ninth country to its geographic footprint.
First established by Iliffe and John Marsh in 2010 with its earliest projects in China and Australia, Logos established its Southeast Asia presence in 2016 when it brought on board Stephen Hawkins as its head of the region.
Having since set up ventures in Malaysia and Indonesia, the company now has $9.5 billion in assets under management across 100 logistics estates in the Asia Pacific region. Iliffe intimated that further Southeast Asian expansion, including a potential move into Thailand, could be in the pipeline for the warehouse developer.
ARA Tie-Up Boosts Expansion
Logos’ biggest Southeast Asian connection was formalised in March this year when ARA Asset Management announced that it had acquired a majority stake in the company.
The deal gave ARA, one of region’s most prominent real estate fund managers, control of Logos’ fast-growing warehouse development platform and provides an avenue to creating a range of private and public logistics real estate funds as institutional investors increasingly look to the sector for dependable investment yields.
With the coronavirus pandemic having dented returns from traditional core sectors, logistics has moved still further up investor priority lists this year, a trend noted by one of ARA’s primary backers, Warburg Pincus.
“Logistics hasn’t skipped a beat over the past three to four months even in the midst of the pandemic,” Warburg Pincus’ head of Southeast Asia Jeffrey Perlman said in a July interview with Mingtiandi. He added that, “Investors have really looked to prioritize logistics over almost any other property type within real estate given a lot of the resilience that we’ve seen in logistics on the back of e-commerce.”
In addition to ARA, Logos counts Canada’s Ivanhoé Cambridge among its largest shareholders with the division of Caisse de dépôt et placement du Québec in May this year having teamed up with Logos and Canada’s CPPIB in an $850 million Singapore logistics venture.
In April Ivanhoe Cambridge and the Netherlands’ Bouwinvest agreed to an $800 joint venture with Logos targetting China projects just days after Singapore’s GIC was reported to be backing a $150 million New Zealand logistics initiative by the warehouse developer.