Singaporean landlord Mapletree plans to double the size of its inaugural Chinese logistics fund over the next 10 years as the firm anticipates sustainable growth in the sector.
Launched in December 2022, Mapletree China Logistics Investment Private Fund has raised $930 million from a group of institutional investors, including insurance companies and endowment funds, a release seen by PERE noted. While Mapletree holds an approximately one-third stake in the fund, most of the limited partners are repeat investors from Mapletree’s other private funds, according to two sources close to the matter. The open-ended offshore fund has a build-to-core strategy, and it has been seeded with 43 Grade A logistics properties and development projects. The fund is projected to have a gross asset value of $1.8 billion upon completion of the development projects, and is expected to produce an annualized return of 15 percent.
PERE understands that the fund will undertake a capital recycling strategy to continuously grow by divesting completed projects and re-investing into new development projects primary from Mapletree’s own development pipeline. With a growing distribution yield paid on a semi-annual basis, the fund is expected to divest approximately four assets and reinvest into six assets annually. At this rate, the GAV of the fund is expected to double in the next 10 years, the two sources said. In addition, Mapletree intends to continuously raise capital from institutional investors and to accelerate the growth of the fund. Currently, the fund has 21 completed assets and 22 development projects.
Lee Ark Boon, Mapletree’s chief executive officer of logistics development in China, was confident about the fund’s ability to deliver “long-term, sustainable returns.” He attributed the vehicle’s anticipated performance to the Chinese government’s focus on logistics as part of the nation’s infrastructure, increasing demand for China logistics from both foreign and domestic institutional investors alike, and recent onshore developments for both RMB funds and C-REIT listings.
Mapletree has 17 years of operating experience in China logistics and currently has close to 140 logistics projects across MCLIP Fund, Mapletree Logistics Trust and the firm’s balance sheet. The group has been committing ¥5 billion ($710 million; €660 million) across 15-20 new development projects annually in the sector and will continue to do so going forward.