Chinese insurer Ping An has completed its first acquisition of a logistics property, buying a warehouse park from real estate investment management firm LaSalle Investment Management in Chengdu.
The insurer acquired the park through Ping An Real Estate Funds Management, its real estate arm founded in May of last year.
The financial details of the transaction were not disclosed, but PERE understands from a source within Ping An that Ping An Real Estate paid less than $100 million for the 969,000 square foot property.
It was also the first deal that Ping An has closed with the investment arm of global property services firm Jones Lang LaSalle (JLL), according to the firms.
Located in the Chengdu International Aviation Hub, 3 kilometers from Shuangliu International Airport, the park is connected to both the Chengdu city center and Tianfu New City. It currently has six warehouses and one office building, and five of the warehouses are nearly fully occupied and there is further development planned.
“This is the first logistics acquisition, but Ping An is actively looking for other stabilized Class A warehouses or industrial land development opportunities in prime locations and strategic gateway cities,” the source said.
The source did not disclose the returns expected from this and other logistics investments undertaken by Ping An, but did say the firm is expecting to do both development and long-term hold investments in the sector.
China’s rapid urbanization and income growth have driven demand better logistics infrastructure. “Considering the low volatility during economic fluctuations, good cash yield, long duration and quality customer base, this product well fits our long term strategy [as an] institutional investor,” she told PERE.
“By leveraging the integrated financial services platform of Ping An Group, Ping An Real Estate is planning to co-develop and construct high quality industrial and logistics parks in China by building up strategic partnerships with experienced logistics developers,” she said. “The vision of our team is to be one of the top three logistics developers in China.”
The exit for LaSalle came from its $3 billion LaSalle Asia Opportunity Fund III, which closed in 2007. The firm acquired the Chengdu asset for the fund in 2009, and is currently in the process of divesting the rest of Fund III while raising Fund IV with a $500 million target.
China’s logistics sector has been heating up recently with certain large, international institutions establishing sizeable footprints in the market over the last few years. In two examples, Sydney-based developer Goodman Group and joint venture partner Canadian institution Canada Pension Plan Investment Board increased the funding of their investment platform to $1.5 billion in July and Global Logistic Properties raised $2.5 billion of investment from several Chinese institutional investors for its China platform in March.