CapitaLand Investment, PGIM launch value-add logistics fund in South Korea

CapitaLand Investment, PGIM launch value-add logistics fund in South Korea

CapitaLand Investment Limited (CLI) has launched a value-add logistics fund via a joint venture with PGIM Real Estate.

CLI has a 10% stake in the fund while the remaining stake is held by PGIM Real Estate. 

The value-add fund has acquired a freehold operating cold storage logistics property located in Gwangju city, southeast of Seoul for about KRW 90.2 billion. 

CapitaLand Investment said the new value-add logistics fund is its fourth private fund in South Korea set up within the past one and a half years.

The latest acquisition is CLI’s third logistics property in South Korea. In November 2021, CLI announced the launch of a core logistics private fund with PGIM Real Estate to acquire two operating cold storage logistics properties. In May 2021 and October 2020, two data centre development funds were also launched respectively.

Simon Treacy, CEO, Private Equity Real Estate said: “The launch of our value-add logistics fund in South Korea demonstrates CLI’s fund management expertise and our ability to execute a range of fund strategies, from core to development and value-add across different asset classes and geographies. Through our strong deal making capabilities and local networks, we closed this attractive investment opportunity, deepening CLI’s logistics presence in South Korea. Working with like-minded capital partners allows us to expand in the resilient logistics sector in a capital-efficient manner, further increasing our FUM. CLI continues to seek opportunities to establish new capital partnerships and grow our portfolio in South Korea while remaining focused on sustainability.”

Matthew Sohn, Head for Korea, CLI (International) said: “We remain confident in the future growth of South Korea’s logistics sector. Given the favourable demand-supply dynamics and the cold storage logistics property’s prime location with convenient access to Seoul through the expressways, we expect the property to perform well.  After we upgrade the asset from a pure cold storage facility to a key cold storage logistics distribution centre, we expect to generate higher rental income as we lease the property to new tenants, tapping on South Korea’s growing ecommerce market.”

The six-storey cold storage logistics property, named Hansol Cold Storage Centre Gwangju, is on a triple-net master lease with Hansol Logistics, generating stable fee-related income for CLI immediately. When the master lease with Hansol Logistics expires in November 2022, CLI will carry out an AEI over an estimated period of eight months. The AEI planned for the 26,705-square metre (sqm) property includes improving spatial efficiency, adding ramps and docks, as well as upgrading mechanical and engineering equipment. The property will also adopt sustainable building standards and features including the installation of an energy recovery ventilator and high-efficiency LED lights.

The property is located next to Taejeon Junction, a major traffic hub in Gwangju and is within a 30-minute drive to the south and east of Seoul through direct linkages to the Gyeongbu Expressway and the upcoming Seoul-Sejong Expressway which will be ready in December 2022. The cold storage logistics property will meet the demand for last-mile delivery services from the growing southeast region of Seoul.