Pension board adds to property in China
The Goodman Group and the Canada Pension Plan Investment Board will add $500 million to their joint property investment and development venture in China, raising their total financial commitment for such projects and investments across the country to $2 billion.
The Canadian pension plan board and the Goodman Group in 2009 established a partnership under the banner Goodman China Logistics Holding, to jointly invest in properties in China.
With an initial equity commitment of $300 million, GCLH has invested in 27 logistics projects in 10 Chinese markets, including Shanghai, Beijing, Tianjin, Kunshan, Chengdu, Suzhou and Jiaxing. The portfolio has an occupancy rate of 97 percent.
According to the recently announced agreement, the Canada Pension Plan Investment Board (CPPIB) will contribute $400 million more to GCLH, with the Goodman Group contributing an additional $100 million. This combined $500 million commitment increases the total to spend on property projects in China to $2 billion, and establishes it as the fourth equity increase by the joint venture partners since the inception of GCLH.
“With this increase in equity allocation, our China platform will be able to expand its footprint in one of our biggest growth markets, where we continue to see strong demand for high quality logistics space,” said Greg Goodman, CEO of the Goodman Group, the largest industrial property group listed on the Australian Securities Exchange and one of the largest listed specialist fund managers of industrial property and business space globally. “CPPIB is an important global partner for Goodman and we are delighted to further build on our well-established relationship,” he said.
Jimmy Phua, managing director and head of real estate investments in Asia at CPPIB, agreed.
“CPPIB’s additional equity reflects the success of the joint venture to date and the longstanding partnership we have with Goodman,” he said.
CPPIB is a professional investment management organization that invests the funds not needed by the Canada Pension Plan (CPP) to pay current benefits on behalf of 18 million Canadian contributors and beneficiaries. CPPIB invests in public equities, private equities, real estate, infrastructure and fixed income instruments. It is headquartered in Toronto, with offices in Hong Kong, London, New York City and São Paulo.
The Hong Kong office, serving as a regional hub for the activities in China, Australia, India, Japan, Korea, and other markets, boasts more than $32 billion of the total assets invested in the region, including the Commonwealth Property Fund and Barangaroo South in Australia, China Vanke and Goodman China Logistics Holdings in China, Global Logistics Properties in Japan, and Piramal Enterprises Group and Shpoorji Pallonji Group in India.
Earlier this year, CPPIB formed a joint venture with China Vanke Co Ltd., China’s largest property developer, by investing $250 million in the Chinese real estate market, a move to seek opportunities through new residential development projects in large cities across China.
CPPIB operates at arm’s length and independently of the Canada Pension Plan.
Goodman, the integrated property group with operations throughout Australia, New Zealand, Asia, Europe, the United Kingdom, North America and Brazil, currently has approximately 800,000 square meters of developments underway in a number of key cities across China
“We have a strong pipeline of projects in China and are supported by extensive resources, quality people and access to significant land,” said Philip Pearce, Goodman’s managing director for Greater China. “Since the start of our partnership with CPPIB in 2009, we have steadily grown, expanding into new cities as our domestic and international customers continue to grow their businesses in China.”