Carlyle’s Metropolitan Invests $50M with China Cold Chain Platform to Launch SH Project

Mainland Chinese logistics firm Metcold has reached an agreement with Metropolitan Real Estate that will see the Carlyle Group-backed fund manager invest a total of $50 million in two of Metcold’s opportunity funds and in a cold storage project in Shanghai.

The Shanghai joint venture, which is Metcold’s first project in the megacity, aims to upgrade an existing facility in Liantang Industrial Park in Qingpu district, to create “a new standard benchmark for functional and intelligent cold-chain processing of fresh fruits in Qingpu”.

“The cooperation with Metropolitan Real Estate further extends Metcold’s foundation with leading international institutional investors, and accelerates our business expansion and strategy development,” said Metcold CEO Henry Ha.

The investment by Metropolitan was announced less than four months after the fund manager joined forces with Hines to acquire a refrigerated storage facility in southern China, with Carlyle in the process of selling Metropolitan to BentallGreenOak via a deal announced late last month.

Reefer Upgrade

The Shanghai joint venture aims to upgrade an existing cold storage asset in the western suburbs of China’s commercial capital as demand rises for fresh food deliveries and high-end grocery chains proliferate.

The existing facility has a gross floor area of 40,000 square metres (430,556 square feet) and cold storage capacity of over 400,000 cubic metres (including 128,000 cubic metres of automated cold storage).

“We are thrilled to partner with Metcold, the cooperation of which will further consolidate Metropolitan Real Estate’s cold chain investment strategies in China,” said John So, global co-head and managing director of Metropolitan Real Estate.

Metcold expects the project to serve demand from residents in Shanghai and the Yangtze River Delta once completed by the end of 2022.

China’s cold chain was worth RMB 276 billion ($42.4 billion) in 2019 after growing at a compounded annual rate of 10.5 percent from 2010. With handling of fresh produce and other food products driving the majority of demand, the market is expected to reach RMB 512 billion in 2026, according to a report published last year.

Chilly Shed Network

“With the boost from institutional capital, Metcold will continue to strive for delivering safe, hygienic and dependable modern cold chain facilities and services to food consumers all over China,” Metcold’s Ha said.

Ha’s company currently manages 15 projects with a total investment of RMB 6 billion, a planned gross floor area of 1.3 million square metres and cold storage capacity of 2.8 million cubic metres.

Founded in 2015, the firm established its Metcold Opportunity Fund I that year to invest in cold chain facilities in Xi’an, Kunshan and Xiajing. Those three projects are in full operation. Further projects in Changzhou, Nantong and Haimen are expected to be launched in the second quarter of this year, while projects in Wuxi and Hainan are under construction and due for completion in 2022.

In its project with Hines announced last November, Metropolitan formed a joint venture with the US developer to acquire a 33,800 square metre cold storage facility and adjacent development site in the city of Dongguan in Guangdong province.

Hines and Metropolitan plan to build an additional multi-storey cold storage complex on the site adjacent to the existing facility in Shatian district.

Ownership in Transition

Founded in 2002 in New York and acquired by Carlyle in 2013, Metropolitan Real Estate manages about $2.4 billion in assets. BentallGreenOak’s acquisition of the Carlyle unit is expected to close in the first half of this year.

As of 31 December 2020, Metropolitan Real Estate had invested with more than 120 managers across 274 fund investments with exposure to over 5,000 assets globally.

BentallGreenOak has been active in pursuing deals globally this year, including buying a UK logistics portfolio from Morgan Stanley at the beginning of February.