Canadian real estate manager QuadReal Property Group has entered a $1 billion partnership with Chinese logistics developer and investment manager New Ease, as part of the investor’s plan to further explore real estate opportunities in the country, PERE can exclusively reveal.
Managed by Warburg Pincus-backed logistics platform New Ease, the partnership will focus on developing logistics assets in China’s tier one, tier 1.5 and selected tier two cities with dynamic manufacturing and consumption activities, according to a statement seen by PERE. The partnership has been seeded with a prime land site in Suzhou where New Ease will develop a three-story ramp-up facility of 140,000 square meters. The partnership is also understood to have a pipeline of over $1 billion in development projects.
Dennis Lopez, chief executive at QuadReal, told PERE in a separate interview that the firm sees plenty of opportunity in logistics development in China where the e-commerce penetration rate is almost 30 percent of consumers and a distribution network that lags North America. The market will be a key focus for the group’s Asia-Pacific team in Hong Kong.
The partnership with New Ease is the Canadian firm’s second logistics investment in the country, according to the statement. The first was in 2019 when it acquired a controlling interest in three near-stabilized logistics assets in Wuhan, Chengdu and Greater Shanghai.
QuadReal currently has assets under management of $400 million in China since making its first direct investment into the country in 2018. Its portfolio includes several office assets in Shanghai and Hong Kong, as well as the portfolio of industrial assets throughout China.
Despite the “challenging” relationship between China and the West, Lopez was hopeful that the dialogue between the two countries will be calmer, according to his interview. With a double-digit return target, he looked to “keep a low profile and find ways to participate in [China’s] substantial economic growth.”
The partnership adds investment management capability to New Ease’s platform for the first time since it was established in 2018. The firm has a proven track record of working with global institutional capital, having worked with UK private equity firms Actis and JPMorgan as an operator and developer. They invested approximately $200 million and $600 million, respectively, with New Ease to develop logistics projects in China last year
Sun Dongping, founder and chairman of New Ease, was the founder of logistics firm E-Shang and industrial park developer and manager D&J. E-Shang merged with Redwood in 2016 to become ESR, one of the biggest logistics players in the region.
“Partner selection and alignment are important components of how we conduct our investment activities in China,” explained Peter Kim, QuadReal’s managing director in Asia. “We do not view New Ease as a first-time investment manager given Mr Sun’s extensive track record and experience in creating successful logistics partnerships throughout his career.” Kim’s first involvement with Sun stems back to the global financial crisis when the two were working on a 255,000 square meter ground-up logistics project in Kunshan. Sun was the development partner and the asset was then leased to Amazon.