May 07, 2020 03:44 PM

Newease China Sets Up Joint Venture to Cash in on Modern Logistics Facilities

(Deal Street Asia) — Newease China, a Warburg Pincus-backed Chinese logistics real estate platform, announced on Wednesday that it has set up a joint venture with institutional investors advised by J.P. Morgan Asset Management to tap into investment opportunities in China’s modern logistics facilities.

The initial portfolio of the joint venture consists of logistics facilities worth about $600 million developed by Newease China, located in gateway cities including Shanghai, Nanjing, and Suzhou, according to a statement.

“We are very excited to partner with J.P. Morgan Asset Management, which has deep experience in the global real estate investment field,” said Sun Dongping, founder and chairman of Newease China, in a statement. “Despite the interruptions brought by Covid-19 in China, tenant demand for quality logistic facilities remains robust — and perhaps has even strengthened — as consumers increasingly shift to e-commerce.”

“The joint venture is well-positioned to capitalize on China’s supply shortage of high-quality industrial property given current and future tenant demand levels,” said David Chen, J.P. Morgan Global Alternatives’ chief investment officer for Real Estate Asia-Pacific.

Newease China was established in 2018 by the management team and Sun Dongping, also the founder of Chinese integrated industrial properties and service platform D&J China. The company focuses on the investment, development and management of institutional-grade logistics properties in China. It recorded about 4 million square meters (about 1.54 square miles) of logistics assets in operation or under development in China as of the end of 2019.

The company is ramping up efforts to capture opportunities in rising demands for quality properties, predominantly from e-commerce tenants, who have seen their businesses grow exponentially as more people resort to online shopping during the coronavirus pandemic.

The Chinese player joined its foreign counterparts, including New York-listed global logistics real estate specialist Prologis, which raised another $1.44 billion for Prologis China Core Logistics Fund (PCCLF) in April, roughly four months after the firm created the perpetual life vehicle for logistics properties in China.

Global logistics provider GLP also closed its GLP China Income Fund I in the same month at about 15 billion yuan ($2.1 billion).

In January, Shanghai-based Newease China entered into an agreement with London-based growth-market investment firm Actis to create a joint venture to develop modern logistics properties in China. The entity’s first batch of projects are expected to launch in core areas in Chinese cities of Chongqing, Quanzhou, and Tianjin with a combined investment of about $200 million, as per an earlier statement.

The company secured $400 million in equity investment from Warburg Pincus in September 2018, which gave the New York-based private equity major a 50% stake in the company.

This story was originally published by Deal Street Asia

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