Prologis brings China logistics fund to $1.75bn

The US-based logistics developer has completed the third tranche of fundraising for its China JV, just eight months after the second tranche.

Prologis, the San Francisco-based industrial real estate operator, developer and fund manager, has added another $588 million of equity to its China joint venture with HIP China Logistics Investments, according to a firm statement.

This represents Prologis China Logistics Venture’s third tranche of fundraising, bringing its total committed equity to $1.75 billion. Including leverage, the vehicle is now expected to have an investment capacity of $3.5 billion, according to the statement.

“The fundamentals of the Chinese logistics sector are very compelling, fueled by domestic consumption and the growth of e-commerce,” said Gary Anderson, chief executive of Prologis Europe and Asia. He has previously pointed to a shortage of Class A distribution space in the country. “This incremental equity commitment enables us both to continue to grow our joint business in China.”

The Prologis China Logistics Venture was originally formed in March 2011 under AMB Property Corporation before it merged with Prologis, and was expected to run until March 2018. Since taking over AMB, Prologis has raised further capital for the same vehicle but not announced a later end date.

As with the first tranche, $500 million of the equity for the third capital raising was contributed by HIP China Logistics Investments and $88 million by Prologis. The second tranche was closed in November of last year, but at the time Prologis declined to comment on the split of capital in that tranche. The venture is expected to continue its original investment strategy to build, acquire and manage logistics properties in China.

Prologis’ equity partner, HIP, is a specially-created entity established under Jersey corporation law in February 2011. However, people familiar with the matter told PERE previously that HIP was a China-based real estate investment fund backed by international capital. PERE has reported that the Abu Dhabi Investment Authority is at least one of the significant equity partners behind the vehicle.

With $51 billion assets under management globally, Prologis currently owns or has investments in properties and development projects expected to total approximately 574 million square feet in 21 countries. Its Asia platform is divided between China, Japan and Singapore, and in China specifically operates 19 logistics centers.