NORTH AMERICA – The New Jersey Division of Investment is looking into making a $75m (€55.4m) commitment into the GLP China Logistics Fund I.
In a board-meeting document, Christopher McDonough, acting director at the pension fund, said the Chinese logistic warehousing market was characterised by a limited supply of competitive stock, high barriers to entry and an increasingly sophisticated customer base who view more than 75% of the current properties as obsolete.
Due to these factors, the development yields can be approximately 8.75%, with a projected unlevered IRR of 14% for a 10-year holding period, New Jersey said.
It said this compared favourably with other property types in China such as office and residential, and industrial in the US and Europe, which have shown development yields closer to the range of 6-7.5%.
All of the deals for the commingled fund will be in Mainland China.
GLP is looking at a total capital raise of $1.2bn-1.5bn.
The sponsor is planning on committing $750m, or 51% of the total capital commitments to the fund.
The targeted returns are 14-16% net IRR.
GLP is an industrial and logistics infrastructure provider.
The company was formed in 2009 by the acquisition of nearly all of Prologis's Asian operations by the Government of Singapore Investment Corporation.