Logistics powerhouse GLP has been raising an increasing amount of onshore capital in China, as demonstrated by its latest fundraising targeting the country.
Since 2017, the firm has raised around $5 billion, or 45 percent of its China fund capital, from its onshore income-producing strategy. Out of the nine China logistics real estate funds that GLP has closed since 2013, six have raised capital from onshore investors.
Last week, GLP closed its third China and latest onshore income vehicle, GLP China Income Fund III, with a single investor at 4.5 billion yuan ($696 million; €586 million) of assets under management. Similar to its two predecessors GLP China Income Fund I and Fund II, Fund III also follows a core-plus return strategy. But unlike Fund I and II, the latest vehicle focuses on high-tech and innovation-based manufacturing industries aligned with China’s economic growth initiatives.
Fund III is seeded with 11 assets with tenants from aerospace, automotive components, precision instruments, electrical and energy generation equipment, telecommunications, automation and robotics, 3D printing, and R&D for software and hardware companies. Located in key logistics and industrial hubs across China, the portfolio is understood to be 95 percent leased.
GLP began raising onshore vehicles with domestic institutional investors to acquire completed logistics and industrial assets in China in 2017. The investment approach differed from its previous two China-focused logistics vehicles that were invested in development projects with offshore investors.
Its first income-producing onshore fund, GLP-China Value-Add Venture I, raised 10 billion yuan from a single investor, China Life Insurance. Shortly after the introduction of its value-add strategy, the firm expanded into the core-plus space with the launch of its 15 billion yuan GLP China Income Fund I in 2019. The vehicle was closed within eight months with commitments from seven domestic investors.
Last but not the least, GLP entered the core market by introducing its GLP C-REIT in June this year, raising more than 5.8 billion yuan from its initial public offering. The firm was the first international company to list a real estate investment trust in China.
The logistics specialist has now introduced seven China income funds ranging from core to value-add. It is understood that six of the seven funds – representing $5 billion in total equity – have been raised from onshore capital. Meanwhile, the firm has raised over $6 billion from three offshore vehicles: China Logistics Fund I in 2013, China Logistics Fund II in 2015 and GLP China Value-Add Venture II in 2018, according to GLP. The firm’s China Logistics Fund I and II, which have a development strategy, have an average equity size of approximately $3 billion, while the income funds are each less than $1 billion in size.
Teresa Zhuge, executive vice-chairman of GLP China, said in a release that the firm “continues to see robust investor demand for stable logistics and industrial assets and income streams in China.” Today, GLP has total gross floor area exceeding 43 million square meters and real estate assets under management of more than $40 billion.