Keppel Capital, through its China logistics property fund, has partnered Chinese logistic park developer and operator BLOGIS to acquire the fund’s first asset, a grade-A high-standard warehouse, located in Dongxihu, Wuhan, China.
The Wuhan warehouse spans 70,000 sq m and serves e-commerce, third-party logistics and coldchain sectors, according to a Jan 4 press release.
Managed by Keppel Capital China (SG), the fund, together with BLOGIS, has committed to a combined asset under management (AUM) of approximately RMB3,200 million ($634 million).
Launched in 2021, the fund aims to invest in and develop high-quality logistics assets in key logistics hubs in China, together with its local partner BLOGIS.
Keppel Capital is the asset management arm of Keppel Corporation, with AUM of approximately $42 billion as at end-2021.
BLOGIS is held by China Nanshan Group. It has around 20 years of local expertise in the logistics development sector, with an existing AUM of more than 70 high-end logistics assets with 10 million sq m gross floor area (GFA) in more than 40 cities in mainland China.
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Following the acquisition of the Wuhan warehouse, the fund and BLOGIS will jointly continue to invest in a pipeline of investment opportunities in key logistics markets, such as Yangtze River Delta, Beijing-Tianjin-Hebei region and other logistics hubs, says Keppel Capital.
“Despite the impact Covid-19 has on the China domestic market, the demand for logistics remains stable, especially for the e-commerce and food sectors. These conditions heightened the demand inelasticity of logistics service providers, benefiting the demand for warehousing in the long term,” adds Keppel Capital.
CBRE expects the overall average rental growth for warehousing in China to surpass 2.5% in 2022, says the asset manager. “Furthermore, the investment and development of logistics assets in key markets are supported by China’s policies for the development of new infrastructure facilities as well as diversification of financial products such as China’s REITs.”
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Eric Goh, CEO of Keppel Capital China, says: “China’s logistics sector has continued to see growth and capital inflows in recent years. Driven by rising domestic consumption as well as e-commerce, China’s demand for quality logistics facilities is expanding rapidly. Keppel is happy to partner BLOGIS for their expertise in the development and operation of logistics assets in China. Together with BLOGIS, the Keppel China logistics fund is seizing opportunities presented by the resilient logistics sector to deliver attractive risk-adjusted returns for our investors.”
Keppel Corporation does not expect the acquisition to have any material impact on its earnings per share and net tangible asset per share for the current financial year.
Shares in Keppel Corporation closed 5 cents lower, or 0.69% down, at $7.22 on Jan 4.
