GPT scores Canadian backer QuadReal for $1bn industrial play

Winning the Canadian heavyweight as a backer is part of GPT chief executive Russell Proutt’s plans to grow the company.

GPT Group's chief executive, Russell Proutt

The listed GPT and QuadReal Property Group have unveiled a new $1bn Australian logistics fund aimed at capitalising on the still hot demand for new facilities.

While the sector is now coming back to the pack after outperforming in the years after the pandemic, there is still solid demand for space in major capitals.

The move is in keeping with strategies by GPT chief executive Russell Proutt to shift from its passive ownership style and into taking on more development and funds management.

The latest venture, to be known as GPT QuadReal Logistics Trust 2, will be seeded with about $460m of high-quality, stabilised logistics assets located in east coast urban infill and middle ring locations.

Once that is set up, the partnership will target further growth by deploying $500m, focusing on acquisitions of stabilised, core-plus opportunities in major east coast markets.

The venture will serve as the primary vehicle for QuadReal to scale up its Australian logistics investments and it will be operated and managed by GPT.

GPT will sell down a number of balance sheet assets to seed the partnership at book value and keep a 20 per cent co-investment interest. After the deal, net proceeds of about $410m will be used by the group to reduce gearing until reinvested.

QuadReal’s total commitment for an 80 per cent stake in the partnership is about $400m.

QuadReal managing director, Asia, Nat Miller said the company was excited to expand its strategic investments in Australia with a trusted partner like GPT. “The transaction has strong market fundamentals and reflects our high conviction investment strategy, which seeks to build port­folios that are resilient across economic cycles,” he said.

Mr Proutt said setting up the fund aligned with GPT’s strategy to meaningfully invest and grow with its partners by designing and pursuing compelling investment programs. He said the partnership builds on the established ­relationship between the organisations, which span the logistics and living sector.

The groups already have a successful tie-up in logistics and as far back as 2022 their first logistics partnership was well progressed, with half of a $2bn target committed and half of that invested.

GPT has close ties with the Canadian group, and stole a march on its listed rivals by getting into the hot student accommodation sector with it.

Citi analysts said one of the key catalysts highlighted for GPT was the execution of its funds management strategy. GPT trades at a discount to its net tangible assets of about 12 per cent and its funds management business was “arguably free” in the current share price, they said.

Citi said the GPT-QuadReal partnership in logistics had been successful over the years.

GPT shares lifted by 3.47 per cent to $4.79 on the news.

Originally published as GPT scores Canadian backer QuadReal for $1bn industrial play