Global Logistic Properties Ltd. (GLP), China’s biggest modern warehouse operator, plans to start a $3 billion fund that will invest in properties in the country as e-commerce grows and retail chains expand.
GLP, part-owned by Singapore’s sovereign wealth fund, GIC Pte, will partner with six institutional investors, including state and pension funds, to invest in China over the next three years, the company said in a statement to the Singapore stock exchange today. GLP will retain a 56 percent stake in the China fund, according to the statement.
The fund will be the the world’s largest China-focused logistics infrastructure fund, according to GLP. Logistics properties are “the most attractive real estate opportunity” in China as consumers buy more from e-commerce companies including Alibaba Group Holding Ltd. and Amazon.com Inc., fueling demand for storage space, according to a report released in September by Jones Lang LaSalle Inc.
“This transaction establishes a strong platform for future growth and is consistent with GLP’s strategy to focus on the world’s best markets and grow its fund management business,” Jeffrey H. Schwartz, co-founder and chairman of the executive committee of GLP said in the statement. “We will have increased funding in place to capture a significant share in a $2 trillion market opportunity.”
GLP’s second-quarter net income fell 25 percent to $145 million as revenue declined 19 percent to $139.8 million, the company reported separately today.
GLP will provide land to the fund to support 1.8 million square meters (19 million square feet) of leasable area, according to the statement. It has secured a $1 billion credit facility with China Merchants Bank Co. for the new fund, it said.
China is GLP’s key growth market with e-commerce being an important driver of demand, the company said. E-commerce makes up 22 percent of GLP’s total leased area in China today compared with 4 percent in the fiscal year 2010, it said.
GLP will grow its assets under management to $11.4 billion with the addition of the China fund, which already has $1.5 billion of equity commitment, according to the statement.
The company’s shares rose 2.7 percent to S$3.00 at the close of trading in Singapore, bringing its year-to-date advance to 7.9 percent. The FTSE Strait Times Real Estate Investment Trust Index has declined 6.7 percent this year.