ADIA in AMB’s China JV

The Abu Dhabi Investment Authority is a substantial equity partner behind AMB Property’s recently-announced China joint venture, PERE has learned.

In March, the San Francisco-based industrial REIT and private fund manager said it had launched a $588 million venture to target logistics development and acquisition assets in major Chinese cities. AMB committed $88 million of its own capital to the scheme and with another $500 million coming from HIP China Logistics Investments Limited.

HIP is a special-purpose entity established under Jersey law on 23 February and backed by international capital, people familiar with the deal said at the time. However, senior sources have since told PERE that the Abu Dhabi sovereign wealth fund is involved in the transaction. It was unclear if any other equity sources were part of the JV. Both AMB and ADIA declined to comment.

Since the appointment of former Goldman Sachs executive Bill Schwab as head of ADIA’s real estate group in 2009, the sovereign fund has primarily invested in real estate either directly or through club-style structures with two or three partners or as the sole financial partner to a specialist. Speaking to PERE in March 2010, Schwab said “[GPs] need to know that the high degree of discretion people had in the past will be very different today. Some people come to us with numbers that are just too high and don’t make a lot of sense. We want to deploy capital, but we want a premium for something other than just risk.”

With leverage, the AMB JV – which is expected to run until March 2018, according to a first quarter earnings report from AMB – will target investments up to a total of $1.1 billion over the next four years. A majority of the REIT’s operating and development properties in China, including land, already have been contributed to the venture, which initially will target regions such as the Yangtse River Delta, the Bohai Bay Area, the Pearl River Delta and Western China.

In a statement on the China JV in March, Guy Jaquier, president of AMB’s Europe and Asia operations and president of the firm’s private capital arm, said China represented a “compelling investment opportunity”.