China’s booming logistics real estate sector received another vote of confidence last week when an investment firm linked to Temasek Holdings and Hong Kong-based private equity firm RRJ Capital invested $250 million into warehouse developer Yupei.
Yupei, which last year created a US$400 million partnership with US private equity firm Carlyle Group and real estate services firm Townsend Group, will now have even more capital to attempt to expand its position in China’s burgeoning market for logistics space.
The rapid growth of the country’s retail sector, particularly ecommerce have stoked investor enthusiam for warehouse developments in China as many logistics developers report investment yields of 8-9%, significantly more than investors in other real estate sectors currently enjoy.
Investors Renew Hopes for Yupei
The surge of investment in Yupei marks a renaissance for a developer that was earlier abandoned by investment partner Equity International after the Sam Zell-led private equity firm invested $46 million during 2008 with the hope of an eventual IPO for the warehouse builder.
Only three years later, however, Equity International was selling its 49 percent stake in Yupei to Global Logistics Properties for US$53.6 million after Yupei failed to substantially expand its business in China.
Yupei which has already developed warehouses for clients including Coca-Cola, Metersbonwe and Chinese appliance retailer Suning is headed by Anhui entrepreneur Li Pei-yu. The company said in a statement that the additional capital will ensure Shanghai Yupei has enough money for the “foreseeable future” and that it intends to expand its footprint of warehouses to more than 3.4 million square metres by 2017.
Singaporean Controlled PE Joins with Temasek
RRJ Capital, which is headed by Singaporean former Temasek executive Charles Ong and his brother Richard, last year invested $50 million in new shares of Shanghai-based property developer CIFI Holdings (Group) Co after earlier purchasing $100 million worth of the company’s bonds.
In November last year RRJ announced a $500 million fund for investing in China’s residential, retail, hospitality and senior homes market.
Temasek, which is headed by the wife of Singapore Prime Minister Lee Hsien-Loong, is investing in Yupei through its SeaTown Holdings International affiliate.