CPPIB, Goodman Boost China Commitment to $5B

By Scott Baltic, Contributing Editor

Greg Goodman, CEO of Goodman Group

Goodman Group and Canada Pension Plan Investment Board have committed an additional $1.75 billion of equity to the Goodman China Logistics Partnership, bringing their total equity commitment to $5 billion.

The additional equity will be invested on an 80:20 basis, with CPPIB allocating $1.4 billion and Goodman $350 million, consistent with the partnership’s equity structure.

GCLP was established in 2009 to invest in high-quality logistics properties in prime locations across mainland China. Following a development-led strategy centered on major Chinese gateway cities, the partnership’s portfolio has grown to comprise 33 logistics properties totaling 2.5 million square meters (26.9 million square feet) of modern logistics space, with current overall occupancy levels of 99 percent.

“With its growing middle class, significant e-commerce activity and rapid advancements in technology, China is a core growth area for our business,” Greg Goodman, CEO of Goodman Group, said in a prepared statement.

Jimmy Phua, managing director & head of Real Estate Investments Asia for CPPIB

“The fundamentals of the Chinese logistics sector remain compelling, driven by domestic consumption growth in China, including e-commerce which underpins the strong demand for prime logistics facilities,” added Jimmy Phua, managing director & head of Real Estate Investments Asia for CPPIB.

Kristoffer Harvey, CEO of Goodman Greater China, noted that this additional funding will help GCLP both capitalize on acquisition opportunities now in due diligence, as well as develop the partnership’s land bank, over the medium term growing the portfolio to more than 5 million square meters (53.8 million square feet).

China grows, CPPIB buys

Though China’s growth over the past few decades “has been largely based on being the workshop of the world, relying on low-cost labor and often heavy manufacturing,” its “Made in China 2025” industrial strategy launched in 2015 heralded a policy of accelerating the nation’s move up the value chain, according to a June report from Knight Frank.

“In terms of the impact on the built environment,” per Knight Frank, “there will be more investment in high-tech business parks, a continued drive to upgrade existing industrial sites and more investment in modern logistics facilities, while some of the older brownfield manufacturing areas, especially in country’s rust belt, could begin to be targeted in a nascent regeneration strategy.”

As befits its stature, CPPIB has been active lately with some sizable deals.

In late July, it acquired the 1.2-million-square-foot Santa Monica Business Park in Southern California, in a joint venture with Boston Properties. The 21-building, 47-acre property was purchased for a net $616 million and is 94 percent occupied.

And in February, CPPIB and partner Oxford Properties Group bought a portion of the historic St. John’s Terminal site along the Hudson River in Midtown Manhattan. For $700 million, the purchasers got a 3.25-acre site with 600 feet of Hudson River frontage, just south of the 1.8-million-square-foot Hudson Yards project that Oxford is developing with Related Cos.

Images courtesy of Goodman Group and Canada Pension Plan Investment Board