Singapore’s GIC has re-entered Australia’s logistics markets through a AUD2bn (€1.3bn) joint venture with Dexus.
Three years after exiting the sector, the sovereign wealth fund has partnered with the Australian real estate investment trust to established the open-ended unlisted Dexus Australian Logistics Trust (DALT) to buy and development the assets.
DALT will be seeded with a AUD1.4bn, portfolio of fully-leased core logistics facilities, located in precincts with access to major arterial roads, rails and ports, mostly in Sydney and Melbourne.
In addition, Dexus will sell into the trust three developments valued at AUD$138m. These have a combined value of A$500m on completion.
“We’ve been working with GIC for around eight months on establishment of this new joint venture,” Darren Steinberg, Dexus’s chief executive, told IPE Real Assets.
As the foundation investor, GIC will take an initial 25% investment in DALT’s core portfolio. It will have “put-and-call” rights to acquire an additional 24% by June 2020.
GIC will also take an initial 49% interest in the joint venture’s seed development portfolio.
The GIC investment is subject to approval by the Australian Foreign Investment Review Board.
Steinberg said Dexus has the ability to ultimately reduce its current stake in the venture to a co-investment of 10-20%.
Dexus intends to bring other institutions to co-invest in the fund as it sells down its own stake.
Steinberg said the joint venture would unlock the growth potential of the Dexus industrial platform and enable capital to be recycled into Dexus’s development pipeline.
“We see further opportunities within the logistics sector as businesses seek to drive supply chain efficiencies, and preferences for online retail continue to rise,” he said.
GIC’s chief investment officer, real estate, Lee Kok Sun, said: “This investment reflects GIC’s confidence in the long-term potential of Australia’s logistics sector.
“We believe both structural and consumption growth in Australia, particularly from favourable demographics and growth in e-commerce, will continue to drive demand for logistics properties.”
Lee said GIC looked forward to partnering Dexus to establish and scale the joint venture.
In 2015, GIC and its partner, Frasers Property Australia, set a record for that year when they sold a portfolio of logistics assets to Ascenda-Singbridge for AUD1.1bn.