China Life Insurance Co became the second major mainland insurer to commit $1 billion to US logistics real estate assets in one week, when the Beijing-based giant agreed to take a stake in a warehouse portfolio recently purchased by Singapore’s Global Logistics Properties.
The decision by China Life appears to mirror a move by mainland competitor and sometimes partner Ping An Insurance, which announced its own $1 billion program for investing in US warehousing projects during the last week in October.
The investment is China Life’s largest overseas investment to date and moves the insurer, which last year led the $1.35 billion acquisition of a building on London’s Canary Wharf, to among the largest of China’s cross-border real estate investors.
China Life to Buy 30% Stake in US Venture
In this latest acquisition, China Life will take a 30 percent stake in a portfolio of US warehouses acquired by Singapore’s Global Logistic Properties (GLP), according to an account in the Wall Street Journal, which broke the story. GLP announced the acquisition of $4.55 billion in US warehouses from Denver-based Industrial Income Trust in July, but only confirmed the closing of the transaction today, after China Life’s participation had already been revealed by the Journal.
With China Life’s help, GLP is now the second-largest warehouse landlord in the US. The new portfolio totals 58 million square feet, (5.4 million square meters) of logistics assets spread across 20 major markets, including Los Angeles, the Washington, DC-area and Pennsylvania.
The transaction will enlarge GLP’s US footprint by 50 percent to 173 million square feet (16.1 million square metres). In addition to moving up the ranks of US warehouse owners, GLP is also the largest provider of modern logistics facilities in China, Japan and Brazil.
GLP Expanding Relationships With Chinese Heavyweights
GLP, which already enjoys close links with Singapore’s Temasek Holdings and the country’s sovereign wealth fund GIC, now appears to be building much closer ties with mainland institutional investors as well.
This latest cooperation with China Life appears to follow up on a prior investment by the insurer in 2014, when a Wall Street Journal story reported that a consortium that included an investor specified only as “China’s largest insurer” were investing $2.35 billion to take a 34 percent stake in GLP China. While there are different measures for judging the size of insurers, on its corporate website, China Life Insurance Group says that together with its subsidiaries the company “constitute(s) the largest commercial insurance group in Mainland China.”
Also, when the warehouse developer raised $7 billion this year for a new China logistics fund, informed sources indicated that Chinese sovereign wealth fund CIC was a major participant in the fund raising.
Chinese Insurers Pursuing Parallel Paths
China Life’s latest acquisition also underlines parallels between the insurers investment pattern and that of Ping An, which is also a top five mainland insurance firm.
For Ping An’s US warehouse deal, the insurer committed an initial $600 million to a joint venture with Denver-based Blumberg Investment Partners to acquire distribution centres in major American markets. Ping An also indicated that it had allocated as much as $400 million to develop further distribution centres in the US through the joint venture.
Prior to the parallel logistics deals, Ping An and China Life had announced in April this year that they would jointly invest $500 million to take a majority stake in a mixed-used project being developed in Boston by Tishman Speyer.
In 2014 China Life made what had been its largest overseas deal, when it acquired a 70 percent stake in the £795 million (US$1.35 billion) acquisition of a 93,000 square metre (1 million square foot) office building on Canary Wharf. For that deal, China Life partnered with an investment firm belonging to the Qatari government.
Ping An has also been active in London, buying an office block there earlier this year, as well as acquiring the Lloyd’s of London building in 2013.