Canada Pension Plan Investment Board (CPPIB) and Goodman Group, an Australian industry property manager has announced an additional investment of $1.75 billion to the Chinese logistics venture, Goodman China Logistics Partnership (GCLP). The goal of the additional investment is to increase the total equity commitments of CPPIB and Goodman Group to $5 billion in the joint venture that was formed in 2009.

GCLP makes investments in high quality properties in prime locations across mainland China. Since 2009 when the company was formed, GCLP has organically grown its portfolio to 33 high quality logistics properties comprised of 2.5 million square meters suitable for modern logistics space. According to a joint statement released by CPPIB and Goodman Group, the current occupancy level of the properties is 99%.

GCLP was established through an initial equity commitment of $300 million. Goodman Group and CPPIB have continued to regularly increase their commitment to the partnership by providing additional equity that will support business growth every year since 2012. CPPIB has contributed $1.4 billion while Goodman Group has invested an additional $350 million, consistent to the partnership’s equity structure of 80:20.

According to Kristoffer Harvey, CEO of Goodman Greater China, the additional equity commitment will provide GCLP with the means to develop a land bank and grow its portfolio to more than 5 million square meters in the medium term. Harvey further said that there are a number of acquisition opportunities in due diligence. The increase in equity commitment will provide the significant funds to capitalize on the opportunities.

China is a core area for logistics business because of the growing middle class, the significant increase in ecommerce activities and rapid advancements in technology. Greg Goodman, CEO of Goodman Group hopes that the increased commitment together with the long term partnership with CPPIB will provide enough equity to be able to leverage on the opportunities in the market.

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