Goldman Sachs / New Ease in US$488m JV logistics deal

New EaseGoldman Sachs became the fourth international investor to team up with central logistics developer New Ease this year. The Warburg Pincus-backed real estate start-up and blue-chip investment bank announced last month its $488 million worth China warehouse joint venture. New Ease is renowned for playing the role of not only the investor but also the asset manager. This deal is widely perceived as an astute arrangement for both parties. 

 

New Ease
Mr Sun Dongping, Chairman and founder of New Ease

Mr Sun Dongping, Chairman and founder of New Ease, stated, “We are excited to collaborate with Goldman Sachs, one of the world’s leading investors with deep industry insight.”

The chairman also added, “We view the collaboration with Goldman Sachs Asset Management as recognition of New Ease’s capabilities and strong track record in developing first-class new economy infrastructure throughout China.”

The co-founder of ESR ancestor e-Shang prior to starting New Ease in 2018, Sun DongPing, had already invested in Singapore’s GIC, US-based PGIM, as well as Canada’s Quadreal this year, before announcing the latest venture with Goldman Sachs Asset Management.

The source of the assets that are assembled into two portfolios, involved in the joint venture was not disclosed by New Ease. However, the project locations track closely with developments in the Shanghai-based firm’s already existing pipeline, along with facilities in Jiangsu, Henan, Hubei and Hebei provinces.

Tapping the Pipeline

The first assemblage sown into the joint venture consists of an operative warehouse in the Henan provincial capital of Zhengzhou, along with the projects in the industrial hub of Kunshan — located just west of Shanghai — and in the city of Sanhe in Hebei province that is estimated to be finished during the fourth quarter of this year.

Mainland property list websites reveal that New Ease presently has a 319,000 square metre project under development in Sanhe and the 75,000 square metre New Ease Kunshan Zhangpu Auto Parts Supply Chain base under construction in Kunshan. The company finished the 116,035 square metres New Ease Zhengzhou Smart Logistics Park in February 2020.

The second group of properties consists of assets in Hebei and Hubei provinces which will be developed to encounter the growing demands from e-commerce companies. The partners also added that these will help them fulfil orders from third-party logistics providers.

The managing director of Goldman Sachs Asset Management, Luke Wei said: “The continued development of China’s economy, especially through the rapid pace of advanced digitalization of commerce, has further accelerated the development of the logistics warehousing industry and accompanying integrated services”.

In another statement, it was noted that the two companies, New Ease and Goldman Sachs, will also be looking forward to future collaborations and projects beyond the ongoing ones. In the year 2020, New Ease had signed up a joint venture with the UK fund Manager Actis at the beginning of the year.

It was then followed by a $600 million association with JP Morgan Asset Management, in May. The project was established to invest in logistics facilities all across China. According to a statement released by New Ease, the joint venture was sown with a $600 million portfolio of alleviated logistics services the company has established in Shanghai along with the neighbouring cities of Nanjing as well as Suzhou in Jiangsu province.

Global Backing

New Ease runs a portfolio spreading over 6 million square metres (64.6 million square feet) of projects, which were established in the year 2018 by Sun and Warburg Pincus. The projects are completed and now operating, or under work. The firm has $5 billion in assets under management and several projects with international investors.

Moreover, in addition to the revolutionary e-Shang and New Ease, in 2016 Sun Dongping also co-founded D&J China, the value-add commercial developer, with Warburg Pincus. An investment of $220 million was made in this venture. The partners are hopeful and eager that D&J will assist them in replicating their logistics achievements in all the other sectors of the industrial real estate business. D&J further managed contracts including the sale of a Beijing commercial complex to Alpha Investment Partners and AllianzReal Estate for more than $1 billion in the year 2019.

In this year’s March, New Ease made an agreement with Quadreal Property Group, a Canadian pension fund manager. The partnership aimed at investing and developing logistics properties in multiple cities of China, with a complete equity obligation of up to $1 billion. The organisation called New Ease Gold Development LP will be sown with a plot in Suzhou, located on the west side of Shanghai.

In the light of a new statement released by New Ease, the partners, New Ease and QuadReal Property Group plan to grow these into a distribution centre for new-economy initiatives, backup logistics demand in the region. Sun Dongping said “We are excited to partner with QuadReal, a leading global investor with deep industry insight”, “New Ease is committed to providing the essential infrastructure for the new economy customers and we look forward to creating sustainable long-term values for all our stakeholders.”

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