Toronto-based Canada Pension Plan Investment Board and Vancouver-based QuadReal, the real estate company owned by Canadian pension plan bcIMC, have partnered with GLP, the Singapore-headquartered logistics and technology company, to establish a €2 billion European logistics vehicle.
The partners are committing €1 billion in equity to GLP Continental Europe Development Partners I. Of this, CPPIB’s commitment will be €450 million. GLP declined to further comment on the equity composition of the vehicle, but Alan Yang, the firm’s chief investment officer, told PERE the operating partner will be aligned with its Canadian partners.
The capital raised via GLP CDP I will be invested in the development of logistics facilities in Germany, France, Italy, Spain, Netherlands, and Belgium. The vehicle is expected to reach €2 billion in assets under management when it is fully invested, according to a company statement. By then, GLP’s total Europe AUM is estimated to touch $7.2 billion, a sizeable increase from $4.9 billion as of end-September 2018.
The launch of GLP CDP I follows GLP’s $2.8 billion acquisition of Gazeley, the UK-based European logistics business from alternative assets giant Brookfield, last year. Gazeley’s portfolio was split by GLP into two funds. The $2 billion portfolio of operating assets was rolled into GLP Europe Income Partners I, and the firm’s land bank of 16 million square feet of buildable area was seeded into GLP Europe Development Partners, according to PERE’s earlier reports. The two vehicles are now fully allocated.
“From a strategic standpoint, we entered into UK, France, Germany and the Netherlands through the Gazeley acquisition,” said Yang. “While there is still attractive growth for us in these markets, we are expanding our footprint further in this fund and going forward.”
Commenting on GLP’s rationale for playing in the higher risk and return spectrum, given GLP CDP 1’s develop-to-core strategy Yang said: “While we invest across the risk spectrum in a variety of markets, both emerging and developed, the risk adjusted returns for CDP I will reflect logistics development in a mature market. That said, we have opportunities to capture value-add components, even in a mature market like Europe.”
GLP and CPPIB have logistics investment partnerships in several countries, including Japan, Brazil and the US.
“We are developing to a margin alongside our partners and that is attractive to us also because from a fund point of view, our own liabilities are long-term. For us to be able to invest capital in a long-term venture and achieve development-type returns fits well with our greater CPPIB strategy,” Andrea Orlandi, managing Director, head of real estate investments – Europe, said.
This is CPPIB’s first direct logistics investment in continental Europe. Two years ago, the Canadian investor launched a £1 billion ($1.5 billion; €1.3 billion) UK logistics partnership with the Dutch pension manager APG Asset Management and Sydney-based logistics property developer and fund manager Goodman Group.
Additionally, the pension fund also has a €398 million legacy investment in the San Francisco-based logistics real estate firm Prologis’s open-ended vehicle Prologis European Properties Fund II, according to PERE data.
CPPIB now has over C$6 billion ($4.56 billion; €4 billion) invested in real estate across UK and continental Europe, as part of its C$45.0 billion global real estate assets.