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Florence Chong of IPE Real Assets reports QuadReal, GPT double commitment to Australian logistics JV to A$2bn:

Canada’s QuadReal Property Group and Australia’s GPT Group have doubled the size of their logistics joint venture to A$2bn (€1.4bn).

The 50-50 Australian logistics investment partnership was launched in February 2021 with an initial A$1bn.

Peter Kim, QuadReal’s managing director for Asia, told IPE Real
Assets the initial alignment QuadReal expected with the GPT team had
exceeded its expectations.

 

In just under 12 months, the joint venture had invested in seven
developments, four of which were already 75% pre-leased. Upon
completion, these projects would comprise a total of 3.4m sqft of
logistics space, he said.

“We are excited about the opportunities ahead,” Kim said, adding:
“Industrial is one of QuadReal’s global convictions, and Australia is an
important component of that thesis.”

Apart from the GPT joint venture, QuadReal in partnership with Charter Hall Group is currently developing a commercial office complex in Brisbane. The partnership also acquired an office building in Sydney for A$630m in 2019.

“Australia remains a key focus of QuadReal’s Asia-Pacific strategy,
and we continue to monitor its markets for emerging trends and
developments,” said Kim.

QuadReal which is BCI’s real estate subsidiary put out this statement on this joint venture:

The GPT Group (“GPT”) and QuadReal
Property Group (“QuadReal”) today announced their 50:-50 joint venture
has expanded to $2 billion. The partners have an objective to acquire
and develop a high-quality portfolio of Australian prime logistics
assets.
 The
additional commitment follows the successful launch of the initial $1
billion joint venture in February 2021.  In just under twelve months the
joint venture has invested in seven developments, four of which are
already 75% pre-leased. Upon completion these projects will comprise a
total of 3.4 million square feet of logistics space (315,000 square
metres). 
 

Peter Kim, QuadReal’s Managing Director for Asia, commented:
“The initial alignment we expected with the GPT team has exceeded our
expectations. First, we share a commitment to how we will do business
together as both organizations consider the best for today and tomorrow
in design, execution, and environmental stewardship. Additionally, we
share a passion for acquiring or developing high quality industrial
assets to address the increasingly discerning needs of the customers we
serve.”
 

GPT Head of Logistics, Chris Davis, said:
“The success of the joint venture to date is a testament to GPT and
QuadReal’s aligned strategy and values. We share a commitment in
delivering and investing in quality assets for our customers with a
focus on environmental, social and governance (ESG) initiatives. GPT
look forward to further progressing the partnership as we upsize the
capital commitment to $2 billion.”
 

The partnership provides an opportunity
for both GPT and QuadReal to accelerate the growth of logistics assets
under management. GPT has been appointed to provide investment
management, capital transaction, property management and development
services to the joint venture, leveraging the Group’s strong track
record in logistics development and asset management. QuadReal brings
its own extensive experience in the industrial sector, owning and
managing more than 100 million square feet (9 million square metres) of
single-and-multi-tenant industrial buildings across the globe.
The
organizations share an aligned commitment to ESG initiatives, which will
be incorporated into the joint venture’s activities.
 

 All figures in this release are A$ unless indicated otherwise.  

About The GPT Group

The
GPT Group is one of Australia’s largest diversified property groups,
listed on the ASX and a constituent of the S&P/ASX 50. GPT owns and
manages a $2
6.9 billion portfolio of logistics, office and retail property assets across Australia. The Group’s logistics portfolio consists of 69 prime logistics assets, totalling in excess of 1.4 million square metres leased to more than 110 tenants. In 2021, the logistics portfolio grew to $4.4 billion with $1.3 billion of new facilities developed and acquired. The Group has a pipeline of development projects with an expected end value of approximately $1.6 billion.
 
www.gpt.com.au.

About QuadReal Property Group

QuadReal Property Group is a global real estate investment, operating
and development company headquartered in Vancouver, British Columbia.
Its assets under management total $67.1 billion. From its foundation in
Canada as a full-service real estate operating company, QuadReal has
expanded its capabilities to invest in equity and debt in both the
public and private markets. QuadReal invests directly, via programmatic
partnerships and through operating companies in which it holds an
ownership interest. QuadReal seeks to deliver strong investment returns
while creating sustainable environments that bring value to the people
and communities it serves. Now and for generations to come.

QuadReal: Excellence lives here.
www.quadreal.com.
QuadReal reports its AUM in CAD.

Recall, it was a year ago that GPT launched an $800 million logistics partnership with QuadReal:

The GPT Group (“GPT” or “Group”) is pleased to announce it has
entered into a strategic partnership with QuadReal Property Group
(“QuadReal”), with the establishment of the GPT QuadReal Logistics
Trust.

The 50:-50 joint venture has an objective to acquire and develop
a high quality portfolio of Australian prime logistics assets, with an
initial targeted investment of $800 million.

GPT Managing Director and CEO, Bob Johnston, said: “Growth of our
Logistics portfolio is a core focus for GPT and we have made strong
progress in securing development and investment opportunities in the
sector. The logistics market continues to benefit from structural
tailwinds driven by growth in ecommerce, food and pharmaceuticals
distribution and the recovery in the housing market. GPT is delighted to
be building a significant capital partnership with QuadReal that will
leverage GPT’s brand and track record in the sector to create value for
both parties.”

Peter Kim, QuadReal Managing Director, International Real Estate,
Asia adds: “We could not be more aligned with the GPT team. We share a
commitment to the fundamental reasons to expand logistics opportunities
for the tenants with whom we partner. We also share a commitment to how
we will do business together as both organizations consider the best for
today and tomorrow in design, execution, environmental stewardship and
the relationships we foster.”

The partnership launches with more than 20 per cent of the targeted
investment committed across two assets. This includes the acquisition of
a $137 million fund-through1 development at Truganina in
Melbourne’s west, and a $38 million speculative logistics development at
Metroplex Place, Wacol in Brisbane.

The partnership provides an opportunity for both GPT and QuadReal to
accelerate the growth of logistics assets under management. GPT has been
appointed to provide investment management, capital transaction,
property management and development services to the joint venture,
leveraging the Group’s strong track record in logistics development and
asset management. QuadReal brings its own extensive experience in the
industrial sector, owning and managing more than 80 million square feet
(7 million square metres) of single-and-multi-tenant industrial
buildings across the globe. The organizations share an aligned
commitment to environmental, social and governance (ESG) initiatives,
which will be incorporated into the joint venture’s activities.

GPT Head of Office and Logistics, Matthew Faddy, said: “The value of
the GPT Logistics portfolio has doubled since 2017 to $3.0 billion, and
we continue to achieve strong growth through successful developments and
targeted acquisitions. As we look to continue driving growth in the
Logistics sector we are pleased to partner with a global real estate
investor in QuadReal.”

Talk about a successful partnership. In just under twelve months this GPT and QuadReal
joint venture has invested in seven developments, four of which are
already 75% pre-leased.

This partnership provides an opportunity
for both GPT and QuadReal to accelerate the growth of logistics assets
under management, and they’re delivering and moving fast.

At this rate, the upsizing of the capital commitment to $2 billion will be taken up fast.

More importantly, both organizations share an aligned commitment to ESG initiatives, which will
be incorporated into the joint venture’s activities.
  

Logistics properties remain a very hot segment in real estate and investing with a strong strategic partner like GPT is a smart way to gain a foothold into Australia’s burgeoning logistics market.

In related news, QuadReal recently announced the successful closing of its $2.5
billion senior unsecured bank credit facility with sustainability-linked
performance targets:

QuadReal Property Group (“QuadReal”) is
pleased to announce the successful closing of its $2.5 billion senior
unsecured bank credit facility with sustainability-linked performance
targets (“SLL Facility”).  The company amended and extended BCI QuadReal
Realty’s (“BQR”) existing credit facilities transitioning the
facilities into an SLL Facility.  BQR serves as the primary financing
entity for British Columbia Investment Management Corporation’s real
estate program. 
 

Tamara Lawson, QuadReal’s Chief Financial
Officer, said, “We’re very pleased to have transitioned our credit
facilities into an SLL Facility as it reflects the continued growth and
evolution of our sustainable financing program.  We are able to advance
these initiatives because of a demonstrated track work to invest in
innovative solutions to reduce our environmental footprint.” 
 

 

Lawson added, “I thank my colleagues for
their day-to-day commitment to reduce our carbon footprint and to
support our tenants and residents with tools to achieve their own
initiatives.  Our clients and colleagues expect nothing but a full out
effort to do so.” 
 
 

The committed 3-year, $2.5 billion SLL
Facility incorporates two sustainability-linked performance targets
related to reductions in greenhouse gas intensity and energy usage. 
The
terms include incentive pricing which reduce or increase BQR’s
borrowing costs if the targets are met or missed, respectively.
  TD
Securities, RBC Capital Markets, Canadian Imperial Bank of Commerce, The
Bank of Nova Scotia, and Bank of Montreal are acting as co-lead
arrangers and joint bookrunners.  Additional lender participants include
National Bank Financial, HSBC Bank Canada, Fédération Des Caisses
Desjardins du Québec, Mizuho Bank, Wells Fargo Bank, China Construction
Bank, Deutsche Bank, Bank of America and Sumitomo Mitsui Banking
Corporation.  The Toronto-Dominion Bank acted as the Administrative
Agent and Sustainability Structuring Agent for the transaction.  
 

About QuadReal Property Group and BCI QuadReal Realty 

QuadReal Property Group is a global real
estate investment, operating and development company headquartered in
Vancouver, British Columbia. Its assets under management total $67.1
billion. From its foundation in Canada as a full-service real estate
operating company, QuadReal has expanded its capabilities to invest in
equity and debt in both the public and private markets. QuadReal invests
directly, via programmatic partnerships and through operating companies
in which it holds an ownership interest. 
 

QuadReal seeks to deliver strong
investment returns while creating sustainable environments that bring
value to the people and communities it serves. Now and for generations
to come.
 

BCI QuadReal Realty is an actively managed
pooled investment portfolio of real estate and real estate- related
investments. All the assets of BQR are held in trust by BCI and managed
by QuadReal Property Group. BQR’s holdings span property types,
geographic locations, investment sizes and risk profiles. BQR’s
investment strategy is to be well-diversified and to hold quality
properties and investments that will perform well across multiple
economic cycles. BQR was formerly known as Realpool Investment Fund.

What is this all about? Go read my recent comment on real estate’s $1.1 trillion obsolescence hurdle where I discussed how real estate is the largest contributor to climate change at 40% of global emissions and how climate tech for real estate remains the elephant in the room.

QuadReal is a leader in sustainable investing. The committed 3-year, $2.5 billion SLL
Facility incorporates two sustainability-linked performance targets
related to reductions in greenhouse gas intensity and energy usage.

The
terms include incentive pricing which reduce or increase BQR’s
borrowing costs if the targets are met or missed, respectively.
 

These are the type of initiatives which will help QuadReal and BCI reduce their carbon footprint and achieve net zero by 2050 or earlier.

Let me end with some other interesting posts I saw from QuadReal on Linkedin.

First, elevate your brand with an address in the heart of Toronto’s financial
hub, 25 King Street West at King and Bay. Its connection to the city’s
PATH system, immediate accessibility to transit, and the multitude of
restaurants and cafes, makes it one of the most convenient locations in
downtown Toronto.

1649299949 913 QuadReal and GPT Double Commitment to Australian Logistics JV QuadReal and GPT Double Commitment to Australian Logistics JV

Next, QuadReal’s interns had the fantastic opportunity to participate in an Intern Speaker Series with CEO Dennis Lopez who shared his incredible experience and insight.

1649299949 177 QuadReal and GPT Double Commitment to Australian Logistics JV QuadReal and GPT Double Commitment to Australian Logistics JV

I don’t know Dennis well, only recently linked into him, but Gordon Fyfe, BCI’s CEO, speaks highly of him and under his leadership, QuadReal has flourished into a reputable international real estate organization.

I commend Dennis for sharing his insights with interns and would push all senior management executives to do the same, doing their part to mentor the next generation of leaders.

Alright, let me wrap it up there.

Below, RCLCO’s “The Best Minds in Real Estate with Gadi Kaufmann” video
interview series explores a wide range of critical decisions chief
executives across the real estate sector are facing in today’s unique
and challenging times.

In this (2020) episode, Gadi Kaufmann spoke with
QuadReal CEO, Dennis Lopez, about how COVID-19 has affected QuadReal,
the biggest surpises of the downturn, and predictions for how the
current moment will transform the real estate business in the long-term.

Take the time to watch this, it shows you how fast QuadReal has grown since he joined in 2017. I will try to interview Dennis at some point to get his more recent insights on real estate.

Also, Brookfield CEO Bruce Flatt discusses the secret to his firm’s success, where he sees opportunities in energy transformation and infrastructure, and shares his advice for average investors. He speaks on “Bloomberg Wealth With David Rubenstein.” This interview was recorded March 2 in New York.

This is a fantastic interview with one of the most successful alternative investment managers in the world running a global powerhouse. Listen carefully to his views on inflation and rates and a lot more.

If you want to understand why Canada’s large pensions are so keen on real assets, listen to Bruce Flatt.

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