Already one of the world’s largest industrial property companies, with operations throughout Australia, Asia, Europe and the United Kingdom, Sydney-based Goodman Group has set its sights on North America, establishing a partnership with Irvine, California-based Birtcher Development & Investment, which will work with the firm on the development and management of industrial properties, as well as a major capital partner, which will help to finance those investments.
“With A$19 billion (€15.2 billion, $19 billion) of assets under management throughout Asia and Europe, our entry into North America is a logical step in the expansion of our operating platform to service our global customers and equity partners in the world’s largest logistics and industrial market,” said Greg Goodman, chief executive officer, in a statement. “Over time, we also see North America growing to become one of Goodman’s largest markets in terms of assets under management.”
The partnership, which will be known as Goodman North America Partnership, will be financing development opportunities through a joint venture with a major capital partner, which is expected to provide an initial equity commitment of approximately $800 million. Goodman currently is in the final stages of due diligence with the capital partner, which the firm declined to name. However, sources familiar with the matter said the capital partner is the Canadian Pension Plan Investment Board (CPPIB).Goodman North America marks the latest joint venture between Goodman and CPPIB. The C$161.6 billion (€125.3 billion, $157.5 billion) pension plan has committed up to $150 million to a joint venture with Goodman to own and develop logistics properties in China and up to $200 million with the firm to establish a new fund, Goodman Australia Development Fund, which will target development opportunities in Australia.
In March 2011, CPPIB also participated in a Goodman-led consortium to privatise the A$2.5 billion ING Industrial Fund, with the pension plan committing A$600 million to the transaction for a 42.5 percent stake. That venture provided access to a high-quality institutional portfolio of industrial assets in Australia and Europe, plus a land bank for future development.
In a presentation to investors, Goodman called the US “the world’s largest, most liquid and transparent real estate investment market,” noting that current pricing of real estate was very attractive, with a spread of more than 350 basis points to 10-year bonds. The firm also said that investors had been calling for the company to provide a North American investment platform, and that competitively priced land and limited big-box facilities in top-tier locations “has resulted in strong development opportunities for the first time since the financial crisis.”
Goodman North America will seek opportunities in the logistics hubs of Southern California’s Inland Empire, San Francisco and Seattle on the West Coast and New York, New Jersey and Philadelphia on the East Coast. Additionally, the partnership will consider other logistics hubs located around inland ports, intermodals and tier-one ports.
The partnership will be led by executives from both Goodman and Birtcher. Brandon Birtcher, who is the president and sole owner of Birtcher, will serve as chief executive of Goodwin North America.
Goodman and Birtcher so far have committed $700 million toward the acquisition and development of four land sites in areas of the US that currently have an undersupply of logistics space. They include three sites in California – two in Inland Empire, the largest industrial market in the US, and a third in Oakland – as well as a fourth site in the Lehigh Valley industrial market in Pennsylvania.
In addition, Goodman North America currently is evaluating other development opportunities in North America and expects to announce additional acquisitions, which would increase the potential value of its portfolio to $1 billion, in the coming months.
Goodman manages 14 country- and region-specific investment funds that invest in logistics and industrial properties in the Asia-Pacific region and across Europe. The firm currently manages $16.3 billion in assets within its commercial real estate investment funds and has a commercial property portfolio valued at $4.7 billion, including $3.6 billion of direct investments and $1.1 billion of indirect investments through holdings in its managed funds.