CPPIB injects $400m into Goodman China JV

The Canadian pension fund has increased its exposure to Goodman’s China business in a bid to get closer to the country’s burgeoning consumer base. The total amount committed by the partners has now reached $1 billion.

The Canada Pension Plan Investment Board (CPPIB) has increased its investment in a joint venture with Goodman Group that is focused on investing in and developing properties across China.

The steward of the $165.8 billion Canada Pension Plan and the Sydney-based logistics real estate developer and investment manager, jointly announced today they had increased their equity commitments to their JV company Goodman Logistics Holding by $500 million bringing the total invested by the partners since its inception in 2009 to $1 billion.

The new equity commitment comes in the form of $400 million from CPPIB and $100 million from Goodman.

Goodman Logistics Holding has so far been invested into 12 logistics properties across Shanghai, Beijing, Tianjin, Kunshan, Chengdu and Suzhou. The properties are 100 percent occupied, the partners said.

Via its investment, CPPIB will gain exposure to a platform with more than 43 million square feet of land, including land secured and under negotiation, Goodman said. The company said it had more than 10.7 million square feet of occupier demand from its existing customers, 4.3 million square feet of space in development and “the ability” to start development on another 8.6 million square feet over the next 12 months.

Mark Machin, president in Asia at CPPIB, said the Canadian pension was keen to increase its exposure to China’s growing consumer base. He said: “CPPIB’s additional equity investment reflects our belief that China’s logistics sector will continue to grow as demand for modern, efficient logistics facilities is being fuelled by a rising domestic demand for consumer goods.”

“Together with Goodman, we expect that GCLH will continue to perform well over the long term through its participation in the rapid growth of this market.”

Greg Goodman, chief executive officer at Goodman Group said: “Demand for high quality logistics facilities in the major Chinese markets continues to be strong. In the past three months, we have concluded approximately 100,000  square metres of leasing transactions across projects in Shanghai, Kunshan, Beijing and Tianjin. We believe the undersupply of logistics space will continue to underpin demand from our major customers over the medium-term.”

 “This announcement further builds on the strength of our global relationship with CPPIB. Our highly experienced local team of 315 in Greater China will work closely with our customers to deliver modern, high quality logistics space across the key markets.”

The enhanced partnership between CPPIB and Goodman is the latest activity of a long-standing working relationship between the two groups. CPPIB has invested across a number of Goodman’s country and region specific investment vehicles including funds, club investments in addition to joint ventures and in many of Goodman’s target markets including Australia and, most recently, North America.

In June, CPPIB injected another $400 million into an $895 million partnership that will see Goodman break into US logistics development and investment for the first time.