APG is to spend $650m (€477m) on a 20% stake in Chinese warehousing developer and operator e-Shang as part of a joint venture agreement.
The Dutch pension fund asset manager’s stake gives it exposure to China’s logistics sector. The partnership will invest in and develop logistics assets across China.
Sachin Doshi, APG head of non-listed real estate for Asia-Pacific, said the asset manager had watched the sector “closely” in recent years as it experienced the growth of third-party logistics, e-commerce and the evolution of domestic consumption patterns.
He said: “Combined with a severe shortage of supply for modern facilities, logistics in China will be a long-term beneficiary of these trends.”
E-Shang, founded by private equity firm Warburg Pincus in 2011, owns 1.5 million sqm of completed and ongoing projects in Shanghai, Beijing, Guangzhou and second-tier cities.
Late last year, the company, which has raised $1bn of equity capital, secured a $120m pre-IPO loan from Goldman Sachs. Combined with project-level financing, the company said it had “several billion dollars” of funding.
Chinese real estate has attracted institutional money in recent months, with joint venture strategies a common theme. In March, Canada Pension Plan Investment Board (CPPIB) formed a partnership with China Vanke, the country’s largest residential developer. CPPIB, which invested in logistics in 2012, said it would invest $250m in the Chinese residential market.
However, despite the renewed appetite, economic uncertainty in China slowed investment volumes for the Asia-Pacific region in the first quarter of this year – with a 15% year-on-year fall to $23.1bn (€16.7bn), according to JLL. Direct investment in China’s commercial real estate markets fell 18% year-on-year to $3bn.