The urge for Asia-Pacific real estate managers to have a significant logistics portfolio was clear before, but Singapore-headquartered ARA Asset Management’s purchase of logistics specialist LOGOS Property Group highlighted it in bold. In the past year, demand for warehouses has been further accelerated by the outbreak of covid-19 and the sector was named the most popular for investment for the first time, according to CBRE’s investment intention survey released in January 2021.
With a belief that growth prospects in the region’s logistics sector will remain compelling, John Lim, co-founder of ARA, said in a statement that the firm’s purchase of LOGOS will allow the multi-asset manager to “offer our investors a comprehensive set of investment vehicles across the risk spectrum to meet their investment needs in the logistics real estate space.”
The buyout not only won Deal of the Year in Asia by taking more than 40 percent of the votes, it also allowed Lim to take home the Industry Figure of the Year award. In March 2020, ARA became the $6 billion logistics firm’s biggest shareholder after buying 70 percent of its shares from Macquarie, Ivanhoé Cambridge and the firm’s management.
Despite being active in traditional sectors such as retail and office, ARA has been keen to set foot in logistics. The LOGOS acquisition has made the firm a bigger name in logistics real estate as LOGOS is one of Asia’s biggest developers and managers in the sector, besides the likes of GLP and ESR. LOGOS currently has a presence in eight countries in Asia-Pacific.
If ARA’s transaction did not say enough about real estate investors’ growing interest in logistics, industry powerhouse GLP’s success as the region’s Firm of the Year for three times in a row tells another chapter of the same story. And for the second year running the firm has also won the region’s Logistics Investor of the Year award.
The GLP team, led by chief executive Ming Mei, had another rewarding year in fundraising and market expansion. It successfully raised two income vehicles: the $2.6 billion GLP Japan Income Fund and the $2.1 billion GLP China Income Fund. In terms of geographical expansion, the firm entered Vietnam through a $1.5 billion joint venture with SEA Logistic Partners and purchased 3.6 million square feet of land in the country.
In India, GLP-backed logistics firm IndoSpace has also won Firm of the Year: India for the second time in a row, taking close to half of the votes. Beating second place Mapletree and third place ESR, the $2 billion Indian firm secured a 10 billion rupees ($136 million; €112 million) green loan facility provided by HSBC to facilitate 14 development projects under IndoSpace Core.
It also received a $75 million commitment from International Finance Corporation for its $580 million IndoSpace Logistics Parks III.
Although the region’s logistics landscape is becoming more competitive, new players are also proving able to establish themselves. Private equity giant Warburg Pincus has stretched its regional presence in the sector by increasing its stake in Chinese logistics firm New Ease.
Founded in 2018, New Ease formed a $200 million joint venture with Actis and a $600 million joint venture with JPMorgan last year.
Warburg Pincus’s backing of New Ease and ARA has helped the firm win more than 40 percent of the votes to be crowned Firm of the Year: China.
Besides logistics, multifamily is another popular sector that came out strong in the pandemic. Multifamily specialist Greystar won Firm of the Year: Australia raising A$370 million ($282 million; €235 million) for its first Australia fund, defeating Australian landlord Charter Hall and logistics specialist ESR.
Chinese firm Funlive, winner of the Residential Investor of the Year award, also received a commitment from Abu Dhabi Investment Council to set up a $500 million venture to invest in multifamily assets in China.
Winning more than half the votes, Gaw Capital Partners took home the region’s Capital Raise of the Year award with its latest opportunistic flagship Gateway Real Estate Fund VI. The firm’s sixth Greater China/Asia-Pacific-focused vehicle, GREF VI successfully corralled $2.2 billion and an additional $800 million in sidecar co-investment, making it the Hong Kong-headquartered firm’s largest fund to date.
Traditionally, investors have preferred opportunistic real estate investments in Asia, where more growth opportunities are expected. Two out of the three top contestants for the region’s capital raise award in each of the past two years were opportunistic funds, with only one core vehicle making it onto the list.
That core fund was PAG’s Real Estate Partners II in 2019. The $2 billion pan-Asia core-plus/value-add commingled real estate fund won PERE’s capital raise award last year.
But the fundraising landscape in the region has changed in the past few years as more investors have started to look for core or income-generating products, which has been reflected in the contenders for PERE’s capital raise awards. Despite the success of Gaw, both runners-up for the category this year were core and incoming generating vehicles: the $2.6 billion GLP Japan Income Fund and Allianz’s $2.3 billion Allianz Real Estate Asia-Pacific Core I.
Outside of the category, the region has seen more core funds being raised by this year’s awards winners. Apart from its success in Japan, Firm of the Year winner GLP also raised the $2.1 billion GLP China Income Fund I, its first income fund in China. The vehicle was fully-seeded with 34 stabilized assets from its balance sheet.
In Japan, LaSalle Investment Management also bested distressed investment specialist Lone Star and opportunistic investor BentallGreenOak with the launch of its first open-ended core vehicle. Seeded with six assets, the LaSalle Japan Property Fund received $560 million of initial commitments from investors.
In addition to the growing core capital coming from global investors, Asian investors’ interest in the region’s core assets remains strong, despite the disruption caused by the
coronavirus. GIC, Singapore’s sovereign wealth fund and winner of the Institutional Investor of the Year award, bought landmark office assets in Beijing during the pandemic: the $1.15 billion LP Tower and a $430 million office with local manager SDP.
Going forward, investors’ appetite in Asia’s core space will continue to grow, as reflected in the PERE awards. The results also align with industry body ANREV’s latest investment intention survey, released in January 2021.
That report indicated a shift in investors’ investment style preferences away from riskier strategies in the region since four years ago.
Today, 43 percent of the investors see core as the best style in terms of risk-adjusted performance prospects for 2021.