Industrial real estate investment trust (REIT),
) launched a joint venture (JV) in China to expand its business
and leverage on the growing needs of Class-A distribution space.
The deal is in partnership with HIP China Logistics Investments
Limited, for building, acquiring and managing logistics
properties in its global markets in China.
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The JV - Prologis China Logistics Venture 2 - has a capacity of
more than $1 billion, including $588 million of committed equity,
for investments in the nation. This follows another JV that was
earlier formed in Mar 2011 by Prologis and was named - Prologis
China Logistics Venture 1.
Prologis' investment in the logistics market in China comes at an
opportune time. On one side, there is solid growth in consumption
in the market while on the other side, the supply of Class-A
distribution space remains limited. It is the supply and demand
disequilibrium that is driving the demand for logistics
In fact, as per the third-quarter 2013 China Real Estate Market
Review and Outlook published by
CBRE Group, Inc.
), the logistics market remained solid and upbeat and demand for
quality facilities is expected to be steady, going forward.
As per that study, in China, solid demand kept market average
vacancies of major markets at very low levels in third-quarter
2013 while limited supply led to elevated rent rates.
In fact, this continued solid performance and optimistic outlook
of the logistics market in China, is grabbing the attention of
both domestic and international investors. Notably, in Aug 2013,
The Carlyle Group
) and The Townsend Group disclosed investments worth $200 million
for the partial stake acquisition in certain properties owned by
Shanghai Yupei Group as well as construction of new warehouses
over the next two years.
As such we believe that Prologis stands to benefit as it has the
capacity to offer modern distribution facilities in strategic
infill locations globally. We remain optimistic and expect this
move to help the company ride on the growth trajectory, going
Prologis currently carries a Zacks Rank #3 (Hold). However, one
can consider another REIT that is performing better and looks
Cousins Properties Inc.
) - with a Zacks Rank #2 (Buy).