Goldman Sachs rides last-mile delivery boom amid e-commerce lift

The US investment bank is charging into the area locally as same-day delivery changes the face of traditional warehousing.

The investment arm of Goldman Sachs has joined the rush for big ticket industrial properties by pouring about $200m into buying seven last-mile logistics properties around Australia. Picture: iStock

The investment arm of US bank Goldman Sachs has joined the rush for big ticket industrial properties by pouring about $200m into buying seven last-mile logistics properties around Australia.

It is moving in as the sector is getting transformed by demand from e-commerce players and traditional retailers who also want to rapidly deliver goods to more demanding and budget conscious customers.

Big companies are chasing space in middle ring and inner-city suburbs, with developers now building multistorey warehouses to meet their demand, with values outstripping traditional warehousing.

Goldman Sachs Alternatives said it had acquired the last mile logistics properties, which span 65,300sq m of leasable space across Adelaide, Brisbane, Perth and Melbourne, but it did not disclose the price or further details.

The deal was brokered off-market by Cushman & Wakefield’s Tony Iuliano and Adrian Rowse, but they declined to comment.

The portfolio, assembled by Fife Capital, is made up of high-quality, well-located assets near high-capacity roads and freeways in key population centres. They are leased to a mix of e-commerce, transport, wholesale distributors, third-party logistics and other last-mile tenants.

Goldman Sachs Alternatives will work with the low-profile Fife operation on growing the portfolio by making additional property acquisitions. The investment bank said it would look to execute on a broad, detailed value-creation plan to upgrade the efficiency of the assets it had acquired, and industry players suggested it could eventually grow a fund of up to $1bn.

“This investment highlights our continued commitment to Australian real estate and reflects our conviction in sourcing Australian last-mile logistics properties for our investors,” Goldman Sachs Alternatives head of Asia Pacific real estate Nikhil Reddy said. “Logistics is an attractive sector, which benefits from demographic trends and technological advancements. Australia is especially compelling for value creation because it is supported by economic and population growth, alongside historically limited supply.”

Goldman Sachs has a strong track record in the area and previously established the PropertyLink Australian Industrial Partnership, a 75/25 joint venture with Sydney-based real estate investment manager PropertyLink, to acquire a portfolio of secondary, value-add industrial properties in Australia. PAIP was later successfully listed on the ASX, raising more than $500m as a pure play industrial REIT, before again being taken over.

Globally, Goldman Sachs Alternatives has a robust track record of building high-quality logistics real estate portfolios and platforms around the world. These include projects with Dalfen Industrial, which has last-mile industrial properties in North America, and Newdock, a logistics management and investment platform focused on developing and managing logistics spaces in Europe.

Goldman Sachs has been a big investor indirectly in real estate investing in Australia across equity and debt for more than a decade. Since 2017 it has allocated $6.2bn in industrial assets, office and commercial properties and data centres, and it has deployed more than $13bn in alternative investments in Australia since 2012.

Last-mile logistics is getting more crowded as specialists get into the lucrative field, though it is still expected to show more growth in coming years.

The sector has already attracted big players ranging from HMC Capital, which is backed by Funds SA, to Urban Logistics Co, backed by private equity real estate firm Wentworth Capital and US giant BlackRock Alternatives. US private equity house Blackstone has also been buying warehouses in Sydney and Queensland that also play into the theme.

The move is one of the first this year as a series of industrial property groups look to recapitalise their funds or to raise fresh funds to expand. While there has been a rerating of the market as interest rates have gone up and the economic slowdown has hit demand in some areas, last-mile logistics is among the most sought after areas in commercial property.

Other industrial portfolios are in play include the Aliro Group’s unlisted fund, and the listed Growthpoint is also looking for a partner on a slice of industrial assets.