Global Logistics Properties sets up US$7 billion China-focused fund

Global Logistics Properties launched a US$7 billion fund yesterday dedicated to mainland China, piling in on investment euphoria about warehouse demand as China shifts to a consumption-led economy.

Singapore-listed GLP has secured US$3.7 billion in equity commitments from seven unnamed investors, six of them national pension or sovereign wealth funds, for the CLF II fund. The largest China-focused logistics infrastructure fund so far, it will have an investment capacity of US$7 billion after adding leverage.

“We continue to see strong demand from China,” GLP chief executive Ming Z. Mei said. “Despite the recent headlines about the GDP growth slowdown, 7 per cent is by definition a healthy rate anywhere in the world. Retail consumption, which is more relevant to logistics demand, maintains a double-digit growth rate.”

CLF II is an add-on to the US$3 billion CLF I, whose capital was fully allocated more than two years ahead of the planned investment horizon. GLP, created from a spin-off of US industrial property developer Prologis, dominates industrial property markets in China, Japan and Brazil. It is 36 per cent controlled by Singapore’s sovereign wealth fund GIC.

The US$7 billion in funds will be channelled to develop 13 million square metres of warehouses in four years. GLP, the fund manager, holds a 56 per cent stake.

China’s burgeoning industrial property market has lured investors from around the world – most recently Carlyle Group, Glodman Sachs and RRJ Capital - who believe a shifting economic pattern has created vast demand for modern warehouses, where courier firms, e-commerce outlets and third-party logistics service providers store, distribute and process goods.

“Over the last few years, many people make noises about raising capital. Actually raising capital is not the hard part. Executing on the ground is,” Mei said. “As the market gets heated up, it requires deeper knowledge of logistics patterns.”