PGIM Real Estate on Wednesday announced a pair of logistics real estate investments in China that see it spending $323 million to acquire warehouse projects from Warburg Pincus-backed developer New Ease.
The real estate arm of fund manager PGIM, a division of US financial giant Prudential, said it has acquired from New Ease a 10-warehouse complex in Nanjing on behalf of its APAC core-plus strategy, while it is investing to acquire and develop New Ease warehouse projects in Shanghai and Langfang under its APAC value-add strategy.
Shanghai-based industrial developer New Ease will continue to co-own and manage the Nanjing asset, while the Shanghai and Langfang properties will be brought up to modern specifications, PGIM said in a release.
“The properties are a significant boost to our regional portfolio due to their optimal locations and long lease tenures,” said Benett Theseira, PGIM Real Estate’s head of Asia Pacific. “We expect continued strong interest and liquidity for logistics assets in China, given the structural shift towards e-commerce.”
The 10 single-storey warehouses in Nanjing are 97 percent occupied and were built to meet the needs of e-commerce firms, third-party logistics providers and cold chain operators. The sheds in Langfang, south of Beijing in Hebei province, and in Shanghai will be developed into high-quality warehouses to serve e-commerce, 3PLs and other tenants.
“We are pleased to launch our partnership with PGIM Real Estate on these assets, and it demonstrates our capability and track record of developing best-in-class, strategically located industrial and logistics facilities in prime locations across China,” said New Ease chairman Sun Dongping.
Founded in 2018 by Sun and US private equity major Warburg Pincus, New Ease manages a portfolio of over 5 million square metres (53.8 million square feet) of projects that are in operation or under development. The Shanghai-based firm has $5 billion in assets under management and partnerships with multiple global institutional investors.
The company’s tie-ups include a $200 million joint venture with UK fund manager Actis to develop logistics projects in Chongqing, Tianjin and Quanzhou; a $600 million JV with JP Morgan Asset Management to invest in logistics facilities across China; and a $1 billion JV announced in March with Canadian pension fund manager QuadReal for investing in and developing logistics properties in Chinese cities.
APAC Spree Carries On
PGIM Real Estate has barely paused for breath as it continues to cut a wide swathe in Asia Pacific this year with an acquisition blitz.
In early May, sources confirmed to Mingtiandi that PGIM had partnered with Canadian insurer Manulife to acquire a 90 percent stake in the 20-asset Fife logistics portfolio from Blackstone for A$850 million ($663 million).
“Logistics remains an appealing sector for investors because of the continued structural rise of e-commerce across Asia Pacific markets,” PGIM said in a report published this week. “Regional net absorption continues to run at near record levels despite the decline in overall retail sales in 2020.”
Beyond the warehouse sector, the investment manager’s other acquisitions in 2021 include the Lucid Square Toyocho office building in Tokyo from Hong Kong-based private equity firm PAG for $120 million and the 108 Robinson Road office building in central Singapore from local private equity firm Sin Capital Group for $107 million.
The string of deals followed PGIM Real Estate’s final closing in January on a $1 billion Asia Pacific value-add fund, the fourth in a series that has raised nearly $3.7 billion in capital since its launch in 2003.