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CapitaLand Investment launches value-add logistics fund in South Korea to grow funds under management

CapitaLand Investment launches value-add logistics fund in South Korea to grow funds under management

SEOUL, South Korea, March 22, 2022 /PRNewswire/ — CapitaLand Investment Limited (CLI) has launched a value-add logistics fund in South Korea via a joint venture with PGIM Real Estate[1] to grow its funds under management[2] (FUM).  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. CLI’s FUM will increase to KRW 123.8 billion after the completion of its asset enhancement initiative (AEI) for the property. 

CLI continues to expand its private equity business globally and the new value-add logistics fund is CLI’s 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.

Mr 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.”

Mr 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.”

CLI’ s third cold storage logistics property in South Korea

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.

CLI’s first two logistics properties in South Korea were acquired under a core logistics private fund with PGIM Real Estate. The two properties are on master leases, generating an immediate stable source of fee income for CLI. Foodist Icheon Centre has a gross floor area (GFA) of 24,606 sqm and is located near Icheon and Bubal Interchange (IC) while Foodist Gyeongin Centre has a GFA of 8,716 sqm and is located near Cheongbuk IC and Balan IC. They are within an hour from Seoul via expressways and are part of the main sub-markets of the South Korean logistics market.

CLI’s presence in South Korea

With the new value add logistics fund, CLI will have S$1.82 billion of FUM in South Korea upon completion of developments and AEI across the portfolio. In total, CLI has eight private real estate funds holding four office assets, three logistics assets and two data centres under development.

Through CLI’s wholly owned lodging business unit, The Ascott Limited and its hospitality trust, Ascott Residence Trust, CLI also has five serviced residences and hotels with more than 1,400 units in Seoul, Jeju and Seongnam.

[1]PGIM Real Estate is a business of PGIM, the global asset management business of Prudential Financial, Inc.

[2]Refers to the share of total assets under listed and unlisted funds [private funds and/or investment vehicles (including but not limited to programmes, joint ventures and co-investments)]

About CapitaLand Investment Limited (International) (www.capitalandinvest.com)  

Headquartered and listed in Singapore, CapitaLand Investment Limited (CLI) is a leading global real estate investment manager (REIM) with a strong Asia foothold. As at 31 December 2021, CLI had about S$122.9 billion of real estate assets under management, and about S$86.2 billion of real estate funds under management (FUM) held via six listed real estate investment trusts and business trusts, and 29 private funds across the Asia-Pacific, Europe and USA. Its diversified real estate asset classes cover integrated developments, retail, office, lodging, business parks, industrial, logistics and data centres.

CLI (International) oversees the growth and asset management of CLI’s real estate portfolio in developed markets such as Australia, Europe, Japan, South Korea and USA. CLI (International)’s portfolio comprises commercial, data centre, multifamily, business park, industrial and logistics properties. CLI (International) has strong capabilities in deal sourcing and execution, extensive local market insights, as well as a proven track record in enhancing the value of its portfolio.

CLI aims to scale its FUM and fee-related earnings through its full stack of investment management and operating capabilities. As the listed investment management business arm of the CapitaLand Group, CLI has access to the development capabilities of and pipeline investment opportunities from CapitaLand’s development arm. Being a part of the well-established CapitaLand ecosystem differentiates CLI from other REIMs.

As part of the CapitaLand Group, CLI places sustainability at the core of what it does.  As a responsible real estate company, CLI contributes to the environmental and social well-being of the communities where it operates, as it delivers long-term economic value to its stakeholders.

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