Global Logistic Properties Launches $7 Billion China Warehouse Fund

The Singapore-listed company will develop warehouses amid continued growth in consumer spending in China

Esther Fung

The Wall Street Journal

July 20, 2015 8:03 p.m. ET

BEIJING— Global Logistic Properties Ltd. is setting up a $7 billion China-based logistics infrastructure fund, more than double the size of its previous China fund, to cater to rising demand for warehouse space amid continued growth in domestic consumer spending.
The Singapore-listed company said it would hold a 56% stake in the fund, which also has commitments from pension funds and sovereign-wealth funds that Global Logistic declined to identify. The parties are committing a total of $3.7 billion to the fund, known as CLF II, which will have an investment capacity of $7 billion including loans.
Global Logistic, which is the largest firm in China specializing in real estate for the logistics business, said the fund plans to start acquiring land later this year and begin construction of new projects in April 2016. It will develop 13 million square meters (140 million square feet) of space over four years. Currently, Global Logistic has 11.8 million square meters of completed facilities in the country, which was financed by the previous $3 billion fund, CLF I.

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There is growing demand for warehouse space from fast-moving consumer goods companies such as clothing retailers, pharmaceutical firms and food chains, said Global Logistic Chief Executive Ming Z. Mei.
“We’re seeing big demand for cold storage facilities,” said Mr. Mei, noting that recurring food-contamination incidents are a key driver. “Even ice-cream. When it’s manufactured it’s frozen, and when you buy it, it’s frozen. But when you eat it, you can tell that in between, it had melted before, and it does not taste good.”
Amid waning investor interest in the residential and commercial real-estate markets in China due to oversupply concerns, the logistics real estate segment has been a stand out in attracting investment in the past few years. Some investors are starting to become cautious about expanding in the logistics real-estate market, saying there are emerging signs of oversupply in some cities.
Mr. Mei disagreed, saying that strong demand remains in certain areas, especially for quality facilities in prime locations.
“The easy days are over and we’re well placed for the new market dynamic,” said Mr. Mei in a telephone interview.
Global Logistic, which operates warehouses in China, Japan, Brazil, and the U.S., also manages infrastructure funds in those countries.

Tuesday, July 21, 2015