Goodman Group secures Norwegian sovereign fund as a backer for US move
Goodman Group has struck a mega-deal in the US, bringing in the trillion-dollar Norwegian sovereign wealth fund as a backer in the world’s largest commercial market.
The Goodman Group property empire is showing the strength of demand for industrial real estate, striking a mega-deal in the US that has brought the trillion dollar Norwegian sovereign wealth fund in as a backer in the world’s largest commercial market.
The group’s long-time partner in the market, the Canadian Pension Plan Investment Board, has exited their $6bn dollar joint venture, with its holding picked up by the Norwegian fund, and some development properties taken by the listed Australian group.
The Canadian fund’s profitable exit shows both the strong demand for industrial real estate and displays the ability of the Australian listed group, led by billionaire Greg Goodman, to garner fresh capital from international pension funds.
Industrial real estate has been one of the star performers globally, although values have more recently been hit by higher interest rates, partly offset by rising rents. Goodman Group is also refocusing on data centres, with hopes of transforming sites around the world into major facilities.
CPP Investments is expected to realise about $US2.2bn ($3.55bn) in net proceeds from selling its stake in the Goodman North American Partnership. It was set up as a 45-55 partnership between CPP Investments and Goodman Group in 2012, with a mandate to invest in high-quality logistics and industrial property in key North American markets.
The two groups made an initial commitment of $US890m and by 2020 the partnership’s assets had grown to about $US3bn. The pair then committed an additional $US2.5bn of equity to the partnership, increasing their total equity commitment to $US5.5bn. At that time, Goodman allocated $US1.4bn and CPP Investments $US1.1bn.
They said the increased equity allocation, along with debt, took the total investment capacity of the partnership up to $US7.5bn, providing significant capacity for property acquisitions and developments.
The partnership operates in top US logistics markets, including Los Angeles, southern California’s Inland Empire and New Jersey.
It is concentrated in key urban locations near large consumer populations. It is banking on demand for faster last-mile delivery and has developed new facilities.
The partnership benefited from the dramatic surge in e-commerce in the US during the pandemic and is still riding the tide of ongoing supply-chain modernisation as companies seek to control costs.
“The success of GNAP has provided us with an opportunity to lock in strong returns for the CPP Fund and is emblematic of our ongoing partnership with Goodman,” CPP Investments global head of real assets and head of Europe Max Biagosch said.
“The proceeds from this transaction also give us the ability to redeploy capital towards new investment opportunities as our portfolio continues to grow and evolve alongside the global market.”
Mr Goodman added: “We are proud of the success we’ve had with CPP Investments in GNAP across our global partnerships.
”We look forward to maintaining our strong working relationship across asset classes and geographies.”
CPP Investments remains a backer of Goodman in Asia and locally.
Norges Bank Investment Management acquired CPP Investments’ 45 per cent interest in the partnership for a price of about $US1.07bn, and the Goodman Group also acquired a portfolio of mainly value-add and development properties from the partnership.
“We welcome NBIM to Goodman’s global investment platform, and thank CPP Investments for its support in North America over the last 12 years. This activity is consistent with our stated strategy to originate more on balance sheet, and optimise returns,” Mr Goodman said.
Norges Bank Investment Management is the world’s largest sovereign wealth fund.
It said it valued the portfolio at $US3.27bn, and it had $US888m of existing debt.
The deal covers 48 warehouses and five land plots in Southern California, New Jersey and Pennsylvania.
“The portfolio exemplifies high-quality buildings in excellent locations. We have long-term conviction in the investment, and we also see appealing growth potential, given the restrictions on new supply in these locations,” said Norges Bank Investment Management’s head of global logistics real estate, Edward Lerum.
The Norwegian fund aims to manage revenue from Norway’s oil and gas resources to benefit current and future generations.
It has been active in the US and last month took full control of a $US1.95bn portfolio of eight US office properties by acquiring the remaining 50.1 per cent stake from TIAA subsidiaries in an opportunistic play.
Goodman Group has been turning to data centres. In November it locked in more power for a new wave of data centres being developed globally and flagged it could end up operating some facilities as demand surges on the back of the AI revolution.
The market for data centres has been reset by massive investments, led by Blackstone and CPP Investments buying Sydney-headquartered AirTrunk, and the Goodman Group has shifted its business model to develop the massive complexes around the world.
Goodman Group started on new data centres in Europe and Asia, with its workbook in the area at close to $6bn, as the industry races to meet demand from big companies.
In a sign of where Goodman Group is headed, chief executive Greg Goodman said data centres would end up being built next to large industrial complexes in areas such as western Sydney, where there is a scramble for suitable land.
Mr Goodman flagged the group would operate some of the data centres itself, but it would also work with large hyper-scale groups.
Originally published as Goodman Group secures Norwegian sovereign fund as a backer for US move
Electric dreams: Is the grass really greener?
My Victa lawn mower ran on fossil fuels but was reliable, lasting more than 40 years. When it finally stopped working, I joined the Ryobi One electric cult. That was a big mistake.
UK battery developer agrees to Palisade deal
British battery developer Pacific Green has agreed a deal to sell off the first stage of its grid-scale storage project in South Australia to Palisade Investment Partners’ green energy vehicle.