Asia's warehouse operators are witnessing a capital inflow.

 

GLP and the Goodman Group, Asia's two most active warehouse developers and operators, have received a multi-billion dollar infusion of financing this week. The efforts come as supporters, including some of the world's largest sovereign wealth funds, believe that increased demand for logistics facilities will result from China's economic growth and Japan's recovery.Properties in Qatar for sale

GLP, or Global Logistic Properties, is a Singapore-based developer supported by Singapore government funds. It reported that a group of Chinese finance companies had invested $2.5 billion in the company.

The partnership includes the Bank of China, the private equity firm Hopu, and an unnamed significant insurance company. Their investment comes at a time when China's middle class is expanding and increasing discretionary spending in the world's second-largest economy. Despite a slower rate of growth, China's GDP is forecast to grow by 7.2 percent this year.

"The severe absence of modern logistics facilities in China has great potential to increase the efficiency of the logistics business," says Ming Mei, CEO and co-founder of GLP.

At the same time, Goodman announced that the Abu Dhabi Participation Council, the emirate's sovereign wealth fund, was increasing its investment in their Japan joint venture from $500 million to $800 million. The funds will be used to grow that company's development program, Goodman Japan Development Partnership (GJDP).

The 1.4 million-square-foot Goodman Sakai warehouse in Osaka Bay, which is scheduled to be completed in March, is already fully leased. Another three projects have begun construction by the Abu Dhabi joint venture, one in Nagoya and two in Tokyo Bay.

Both GLP and Goodman have substantial portfolios in Japan, where they construct enormous, high-value state-of-the-art facilities near Tokyo and Osaka, and China, where they construct smaller, less expensive warehouses in a variety of places. Based on past performance, investors can expect returns of 10% or more. "In Japan, our strategy is to selectively pursue high-quality opportunities in prime areas where we discover excess customer demand with low competition," says Paul McGarry, CEO of Goodman Japan. "We only invest in places and opportunities where we perceive immediate benefit and long-term growth," says the company.

Goodman's Japan Core Fund is also initiating a new fund raising round, aiming to raise an additional $200 million from existing and new investors. That fund, which now has $900 million in assets, recently collected another $100 million to assist fund the purchase of the Goodman Sakai facility, and it plans to purchase the remaining three warehouses as well, bringing its total to 11.

Goodman, based in Sydney, has stated that it plans to increase the size of the fund, which employs 10% of its assets to build property and the balance in already-built warehouses, to $2.5 billion within the next three years.

GLP is China's largest warehouse operator, with $11 billion in assets under management in its funds. GLP's major shareholder is the GIC Private sovereign wealth fund, formerly known as the Government of Singapore Investment Corp.

It also announced this week that the GLP Brazil Construction Partners I fund, which invests in warehouse development in Brazil, has secured an additional 538 million reals ($227 million), bringing the fund's total capacity to $1.1 billion, including leverage. It has purchased six warehouses and plans to utilize the additional funds to expand and improve current facilities, as well as develop more warehouses in Sao Paulo and Rio de Janeiro and pursue LEED certification for its facilities.

Goodman has its own heavy-hitter backers, since it manages $20 billion in external assets in its funds. Aside from the Abu Dhabi fund, it has the support of the Canada Pension Plan Investment Board, which also supports GLP and is a shareholder in its Brazil fund.