Goodman deploys $100m from CPPIB JV

Sydney-based logistics developer the Goodman Group has secured contracts for three built-to-suit facilities in China, two of which will be developed with about $100 million of equity from the firm’s $1.5 billion joint venture with Toronto-based pension plan Canada Pension Plan Investment Board (CPPIB).

The three projects consist of a 682,000 square foot facility for Chinese third-party logistics provider Deppon Logistics in Nanjing – the company’s second largest warehouse in the country; a 315,000 square foot facility for Chinese express delivery company Yunda Express in Hefei, Anhui province; and a 358,000 square foot facility for car distributer BMW Brilliance Automotive in Hebei province, near to Beijing.

The BMW facility is part of the Goodman Citylink development, which when completed next year is expected to provide 1.4 million square feet of warehousing space worth approximately $90 million, according to a Goodman statement. The development has been contracted by the CPPIB-Goodman joint venture fund, Goodman China Logistics Holding (GCLH), according to Philip Pearce, Goodman’s Greater China managing director.

The Nanjing and Hefei developments are smaller in terms of price, representing investments of approximately $31.5 million and just under $30 million, respectively. The Nanjing development has also been contracted by GCLH, Pearce added. While the Hefei development remains on Goodman’s balance sheet for now, Pearce said the fund has first option to purchase at a later stage.

With these two most recent investments, GCLH will have deployed approximately $100 million of its most recent $500 million capital commitment. In July, CPPIB and Goodman increased their allocation to the fund by $500 million altogether, with $400 million of equity coming from the $176 billion Canada Pension Plan and $100 million of equity committed by Goodman.

The assets currently managed by the fund are valued at about $1 billion, Pearce said. Adopting a core-plus strategy, the fund’s leverage is kept low, typically between 15 percent and 35 percent.

Pearce has told PERE previously that Goodman and CPPIB expected to deploy the latest $500 million in approximately a year. The partners hope to increase the joint venture to $3 billion over the next few years, he said.