LOGOS fully invests maiden $400m Indonesian logistics venture

The firm has invested in a total of four logistic development projects in Indonesia since it first entered the market two years ago.

The Sydney-headquartered property company LOGOS has fully invested its $400 million debut investment vehicle in Indonesia and is now planning to double the size of the platform, according to Stephen Hawkins, LOGOS’s managing director for Southeast Asia.

“We are looking to upsize the venture, so we can start to gradually pursue other opportunities we have identified in the pipeline,” said Hawkins. He told PERE that the new commitment will most likely come through re-ups from the two existing institutional investors that have committed to the vehicle so far.

In 2017, Canadian investors Canada Pension Plan Investment Board (CPPIB) and Ivanhoé Cambridge committed $200 million in equity to LOGOS’s maiden move into the developing country. The total size of the club-style investment vehicle is $400 million, including leverage.

Hawkins told PERE that both investors are long-term investors that would like to create a core, income-producing industrial real estate portfolio in Indonesia. LOGOS also co-invests alongside with its capital partners, but the stake it takes varies from project to project. The firm’s stake in this Indonesian vehicle was not disclosed.

The firm has invested in four projects, totaling 59 hectares of land in Indonesia through this investment partnership. Two of these projects are currently under construction and the remaining two are yet to enter into the construction phase. These four projects are: LOGOS Metrolink Logistics Hub, LOGOS Cileungsi Distribution Centre, LOGOS Cikarang Logistics Park and LOGOS KLOG Cibitung Logistics Hub.

The three-level ramp-up logistic facility Metrolink Logistics Hub in Indonesia, which will be completed by the end of this year, has signed a 10-year pre-lease of 88,264 square feet with the online fashion retailer ZALORA. Meanwhile, the Cileungsi Distribution Centre is 40 percent pre-committed to a local logistics operator.

In terms of expected returns, LOGOS is targeting 8 percent to 10 percent yield on these finished, fully-developed products, and a 15 to 20 percent IRR, according to Hawkins,

Just like LOGOS’s investments in other countries, its venture in Indonesia also has a develop-to-core strategy.

“In a high-growth market like Indonesia, lots of the tenants run out of space or cannot co-locate over their business growth period. That is one area that allows us to be clever, from finding the right land and having the right expansion opportunities for them,” said Hawkins.

Other investors have also shown early interest in the country’s logistic space. As early as 2016, Singapore sovereign wealth fund GIC announced that they would enter into a partnership with local developer Mega Manunggal Property Tbk (MMP) to develop up to five million square feet of quality logistics warehouses.

LOGOS has been foraying into the Asia logistic market proactively. Most recently, the firm has entered into a venture with Dutch real estate investment firm Bouwinvest and Chicago-headquartered LaSalle Global Partner to acquire S$585 million ($432.93 million; €378.49 million) industrial asset in Singapore this January. The firm also has venture partnerships in China and India.

Hawkins told PERE the firm is also looking to expand its exposure to other Southeast Asian countries as well as make inroads into Japan and Korea.