Texas retirement fund pledges $75 million for realty venture
DIVERSE The public pension fund is investing to develop industrial and warehousing parks across locations in India to respond to growing demand for modern logistic facilities
MUMBAI: Employees Retirement System Of Texas, a public pension fund with more than $21 billion in assets under management, has committed about $75 million to IndoSpace Logistics Parks III, the third fund from Mumbai-based industrial real estate investor IndoSpace Logistics Parks, one person directly aware of the development said.
IndoSpace Logistics Parks is a joint venture between private equity firm Everstone Capital and US-based Realterm Group. In November 2017, the asset management company had said that it had launched its third fund, IndoSpace III, with a target corpus of $550 million, which would take its total assets under management to above $1 billion.
When contacted, Sameer Sain, co-founder and CEO, Everstone Group, confirmed the development. “We have a hard cap of $500 million and, at this stage, we are oversubscribed and closed to new investors.” Sain declined to give other details on investors.
The investment was first reported by Pensions & Investments.com, citing a transaction report.
In May, International Finance Corp. had said that it had plans to make an equity commitment of up to $25 million (₹160.8 crore), not to exceed 20% of total commitments, in the $500 million fund to make control investments with majority stakes mainly to develop industrial and warehousing parks across locations in India.
IndoSpace has so far raised $584 million across two industrial real estate funds. The first, IndoSpace Logistics Parks I, had raised $240 million in 2009, and the second, IndoSpace Logistics Parks II had raised $344 million in 2014. Currently, IndoSpace’s portfolio includes 28 logistics and industrial parks across the country.
“We have approximately 12 million sq. ft of fully developed and stable leased assets with another 20 million in brownfield construction, as well as a pipeline of 30 million sq. ft on a national basis,” added Sain.
Its major tenants include Amazon.com Inc., Nissan Motor Co., DHL Supply Chain India Pvt. Ltd, PepsiCo India Holdings Pvt. Ltd and Bosch Group.
According to the company, there is continuous demand for high-quality modern logistics and warehousing facilities due to improved infrastructure and the implementation of the goods and services tax.
According to a 2018 report by real estate consulting firm Knight Frank, government initiatives have provided strong tailwinds to the Indian warehousing and logistics sector.
“The government’s thrust to the sector such as giving infrastructure status to the logistics sector, the ‘Make in India’ programme, development of multimodal transport networks and initiatives to set up industrial corridors like Delhi Mumbai Industrial Corridor (DMIC), Delhi Kolkata Industrial Corridor and logistics parks have propelled the cause,” the report said.
Emergence of exit routes, such as real estate investment trusts (REITs), are also major steps towards attracting more institutional capital for the sector. “Currently, the market for REITs in India is at a very nascent stage and it would take time to evolve. Once the market for REITs matures, institutional investors will be able to get a credible exit avenue to gain from their warehousing investments by listing their warehousing assets through REITs,” the Knight Frank report added.
As per the Economic Survey 2017-18, the Indian logistics sector is expected grow to $215 billion by 2020, from $160 billion currently.
In 2017, IndoSpace and Canadian pension fund CPPIB created a joint venture, IndoSpace Core, to acquire and develop modern logistics facilities in India. CPPIB has made a significant commitment of around $1 billion towards IndoSpace’s assets.
There has been a bunch of deals in the warehousing and logistics space. Last year, logistics investment and development firm LOGOS India raised $400 million from Ivanhoé Cambridge and Vancouver-based QuadReal Property Group.
LOGOS India seeks to develop and own modern logistics facilities across major cities such as Mumbai, Pune, Chennai, the National Capital Region (NCR), Bengaluru, Hyderabad and Ahmedabad.
Similarly, Singapore-based Ascendas-Singbridge Group announced a joint venture with realty firm Firstspace Realty to enter the Indian industrial logistics and warehousing market. They jointly aim to invest $600 million over the next 5-6 years and develop around 15 million sq. ft of space.