Even as China’s economy slows, e-commerce and consumption plays continue to win over investors.
Singapore- and Hong Kong-based private equity firm RRJ Capital and SeaTown Holdings International, part of Singapore state investor Temasek Holdings, said Friday they are investing $250 million in one of China’s largest warehouse developers, Shanghai Yupei Group.
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- SeaTown Holdings International, part of Singapore state investor Temasek Holdings, is investing in warehouse developer Shanghai Yupei Group.
- REUTERS
Yupei provides warehouses for a range of consumer businesses. Its core customers include Coca-Cola, clothing company Metersbonwe and China’s largest brick-and-mortar appliance retailer Suning Commerce Group, according to the firm’s website. In addition, Yupei serves JD.com, a major e-commerce competitor to Alibaba Group Holding Ltd., and Jumei.com, a Beijing-based cosmetics retailer that sells its products via the web and mobile apps.
In recent years, China’s surging e-commerce market, underpinned by increased consumption by China’s larger middle class, has been a major source of demand for warehouses, which house goods along the logistics chain from factory to consumers’ homes.
Yupei, one of the largest logistics warehouse developers in China, already got a $200 million investment from Carlyle Group and real-estate investment manager Townsend Group last August. Together with another $200 million from Yupei itself, the firms had planned to develop in 17 warehouses that would be leased to firms including retailers and e-commerce companies.
With the additional money from RRJ, Shanghai Yupei has enough money for the “foreseeable future” to expand nationwide, said the company press release Thursday. The firm aims to own and operate warehouses that can lease more than 3.4 million square meters by 2017, it said.
The trend of private equity buyers in China’s logistic sector has picked up in recent years with a group of Chinese investors spending a record $2.5 billion to buy into Singapore’s Global Logistic Properties in February. The buyers included Bank of China Group Investment and private-equity firm Hopu Funds, which got a 24% stake in the mainland unit of GLP through the deal.
Underscoring the need for more warehouses in China, logistics space per capita here is around one-12th that of the U.S. Meanwhile, only a fifth of existing warehouse space in China is modern, according to data from the China Association of Warehouses and Storage, PricewaterhouseCoopers and CBRE.
But China is showing fresh signs of economic weakness, which could challenge momentum in key industries like warehouses and logistics. Warehouses are considered a low margin businesses, relying mostly on rents to make revenue. Retail sales are growing at their slowest pace since February 2011, albeit still quickly at 11.8% in the first two months of the year.
RRJ’s first foray into Chinese property was its $50 million investment into Shanghai-based developer CIFI Hodings (Group) Co. last October. That deal gave RRJ a 4.4% into Hong Kong-listed CIFI. The firm’s stock at 1.47 Hong Kong dollars per share are slightly down from the 1.52 that RRJ bought in at, against the Hang Seng Index’s roughly flat performance in the same period.
The private equity firm, which was founded in 2011 by former Goldman Sachs Group Inc. banker and founding partner of China-focused Hopu Investment Management Co. Richard Ong, raised $3.5 billion for its second pan-Asia fund last year.
Singapore’s GLP to Buy U.S. Warehouses for $1.1 Billion
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Deal for $700 million of leased buildings to close this year
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Properties under-development to be acquired over 18 months
Global Logistic Properties Ltd., the second-largest owner of U.S. industrial real estate, agreed to buy $1.1 billion of warehouses from Hillwood Development Co.
“It’s a very high-quality portfolio,” Sullivan said. “We like the nature of the logistics business that the tenants are in.”
Industrial-property landlords are benefiting as the growth of online shopping fuels demand for distribution and warehouse space. The occupancy rate at U.S. industrial buildings is at the highest level since 2000, data from Green Street Advisors LLC show. E-commerce is expanding about 15 percent a year, according to the real estate research firm.
GLP has been pushing deeper into U.S. industrial real estate, with deals including the purchase last year of more than 200 warehouses from Industrial Income Trust Inc. for $4.55 billion. It plans to seek partners for the transaction with Hillwood, a Dallas-based firm founded by H. Ross Perot Jr., and said it expects to retain a 10 percent stake in the properties while continuing to manage them.
Debt Funding
The acquisition will be funded by $470 million of equity and $635 million of debt, GLP said. The transaction enlarges GLP’s U.S. footprint to 187 million square feet (17 million square meters), with the U.S. contributing 8 percent of GLP’s net asset value according to Singapore accounting standards.
The acquisition is GLP’s third major U.S. deal in the past two years. GLP entered the U.S. warehouse market in February last year with the $8.1 billion purchase of IndCor Properties Inc. from Blackstone Group LP. That was followed by the Industrial Income deal in July last year.
SingPost opens logistics hub with sights set on a regional e-commerce boom
Welcome to SingPost’s $182 million bet on the e-commerce industry. Launched on Nov 1, the hub represents the company’s largest e-commerce logistics investment so far. The three-storey facility with a built-up area of 553,000 sq ft boasts 291 chutes for sorting parcels and 150 parking bays for delivery vans. And it will allow SingPost to handle up to 100,000 parcels a day — about 10 times the volume it currently handles.
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