Ivanhoé Cambridge and LOGOS Invest in India's Chakan Industrial Estate

CDPQ's real estate subsidiary, Ivanhoé Cambridge along with the leading Asia-Pacific logistics specialist LOGOS announced they will commit over INR 11 billion (C$180M) investment in Chakan Industrial Estate, Maharashtra becoming the largest FDI led integrated private industrial and logistics development in India:

Mumbai, India – January 18, 2024 –The purchase follows Ivanhoé Cambridge and LOGOS’ acquisition in May 2023 of 77 acres within the Chakan Industrial area; a region that is considered one of Asia’s largest industrial hubs with more than 1,000 manufacturing enterprises including electronics, engineering, automobile and E-Vehicles companies. The combined 143-acre site will provide the opportunity for over 3.5 million square feet of development to meet the robust New Economy demand for prime industrial development in the region.

With direct access from the 75-meter wide Talegaon Chakan Road to the Mumbai Pune Expressway and Mumbai-Bengaluru NH 48, the site, located at the focal point between Talegaon and Chakan, offers convenient access to the Pune region from Mumbai’s port and other key infrastructure. This makes it an ideal location for New Economy warehousing for industrial, e-commerce and third-party logistics (3PL) customers.

The Chakan Industrial Estate represents LOGOS’ fifth project in India, including developments in Bengaluru, Chennai, NCR and Pune, with a total potential development area of more than 10 million square feet. All assets are prime grade and adopt industrial leading ESG practices including roof top solar, dense forests cover and active energy management.

LOGOS’ Co‑CEO Trent Iliffe said: “Pune is one of India’s key growth markets that is benefiting from the strong growth of onshoring as of companies diversify their manufacturing location to India. Maharashtra’s economy has consistently grown by 7% per annum over the past few years in line with this trend, and we expect this growth to continue as this market benefits from this shift in manufacturing.”

“Our business model in India has seen us offer larger scale real estate solutions within one location providing our customers with greater flexibility for future growth. Our Luhari Logistics Estate, which is a similar size to Chakan at 3.5 million square feet, has attracted several of our customers looking for scale and the benefits that an estate can provide, like onsite food and beverage, institutional estate management, landscaping and sustainability through a platinum ESG rated development.”

“The scale of the Chakan Logistics Estate will also allow us to provide this range of offering while also ensuring we meet the Venture’s sustainability commitments. We look forward to bringing our local and global experience in delivering large scale industrial development to this thriving industrial ecosystem,” he added.

LOGOS’ India Chief Executive Officer Mehul Shahadded: “This acquisition demonstrates our long-term commitment and confidence in the Indian logistics and industrial sector, with high demand for holistic, modern and responsible AAA grade infrastructure helping India’s manufacturing growth and related demand for quality and sustainable development. The site is at the heart of the automotive hub and will support ancillary units. We will continue to explore further investment opportunities in Maharashtra, Tamil Nadu and Gujarat.”

“This new site acquisition further deepens our presence in the Indian logistics sector, as we continue to build scale in a high conviction sector. Our extensive presence in this asset class and our local resources enable us to support the expansion of our logistics portfolio in the APAC region, said Pallavi Bhargava, Senior Director, Investments and Asset Management, Asia-Pacific, Ivanhoé Cambridge.

“This investment is aligned with our commitment to sustainability and offers market leading environmental initiatives and options in energy efficiency and renewable energy,” she added.

In line with Ivanhoé Cambridge and LOGOS commitment to sustainability, the Estate will incorporate market leading environmental initiatives including a minimum of seven acres of Miyawaki Forest Plantation, solar power generation, ground water recharge and distribution to warehouses and Estate’s common infrastructure. The Estate is being designed to meet IGBC’s Platinum rating and will be utilising some innovative materials to not only reduce its carbon footprint but remove some of the embedded carbon inherent in construction.

LOGOS Chakan Logistics Estate is being acquired within the LOGOS India Logistics Venture anchored by Ivanhoé Cambridge, which has US$400 million commitment to develop and own high-quality, modern industrial and logistics facilities in key markets of India.

I highlighted all the critical parts of this press release but this represents another excellent industrial/ logistics investment for Ivanhoé Cambridge and its partner in the region, LOGOS.

We know India is booming, its middle class is growing, there will be more and more people ordering things at home and you need state of the art, modern warehouses which adopt the very best in terms of sustainability to attract the very best companies looking for that sustainability edge.

As the press release states, all assets are prime grade and adopt industrial leading ESG practices including roof top solar, dense forests cover and active energy management.

In related news, on the occasion of PERE’s special issue dedicated to sustainable investment, Sunita Mahant, Head of Social Impact and Inclusion, Sustainable Investment, and Simon Lauzier, Chief Financial and Business Performance Officer, examine the ESG-related challenges and opportunities facing investors, and identify the cutting-edge practices being developed to help them deliver their environmental, social and equity goals .They also stress the need for full alignment of interests with all stakeholders to make progress on decarbonization and social impact.

This article was originally published on the PERE website. Click here to read the full version.

Ivanhoé Cambridge provides an excerpt of it on its website:


Why must investors integrate carbon pricing into their asset valuation and financial decisions?

Simon Lauzier : The built environment is responsible for 40 percent of global greenhouse gas emissions and, at a city level, buildings produce 60 percent of emissions on average, so the sector is an obvious target for carbon reduction policies.

As a long-term business, real estate investment is therefore heavily exposed to the effects both of climate change itself and of the changes in regulation and stakeholder expectations that will derive from it. To align with a Paris-agreement compliant pathway, we will have to undertake a deep retrofit of 80 percent of the existing stock by 2050.

However, research by the Urban Land Institute shows that only 4 percent of European real estate investors capture or use a shadow pricing model for carbon in their underwriting. Too often, carbon is not priced in, while still representing an increasing risk factor for investors.

As an industry we need to be better at anticipating the future carbon risk that will materialize and pricing-in this externality. That means being proactive and examining transactions through the right lens to make sure we are buying and selling at the right price.

What challenges do investors face in doing so?

SL : Access to reliable investment-grade data relating to energy use, energy efficiency, carbon emission estimates and the capital cost needed to retrofit properties is a challenge for the whole industry. For example, in most jurisdictions, lease terms do not require tenants to share energy consumption with their landlord, and some of them do not want to.

The current market environment represents another challenge. Inflation and high interest rates make it more expensive to invest in retrofits, and underwriting the impact of decarbonization is more difficult to estimate than it would be in the context of a stable market situation. We need to develop a deeper knowledge of our portfolios, as well as create better alignment of interest with our external asset managers, property managers, GPs, lenders and tenants to deliver ESG improvements and better decarbonization outcomes through linking ESG performance with financial performance.

At Ivanhoé Cambridge, we have implemented a green IRR (internal rate of return) metric, which is essentially a shadow price on carbon, so we can assess how sensitive projected asset cashflows in each region will be to a future in which carbon will have a value. It accounts for a price on carbon during the investment period, the holding period, and also a carbon impact on value creation at the exit.

The green IRR will help us better identify and capture the value created when we invest capex to upgrade a property. For example, we renovated Place Ville Marie, a five-building office complex in Montreal, to achieve the highest energy performance standards, reducing the asset’s carbon emissions by 40 percent, and improving the green IRR by 130 basis points. Some of our peers are also interested in the green IRR concept, and we participate in industry groups aiming to refine it and encourage wider adoption.

That does not replace traditional financial metrics, but it sheds additional light to help us make better decisions. It helps us to activate a ‘brown to green’ strategy because we will be able to better differentiate pricing between brown and green assets and calculate the value we can create by turning one into the other.

What progress have you made on implementing social impact and inclusion into your due diligence processes?

Sunita Mahant : We live in an age where we are facing major impact on communities. The world is increasingly unequal, with 1 percent of the richest people owning 46 percent of its wealth, and vulnerability of low-income households.

The population is also aging; by 2100, 24 percent of the global population will be over 65. People are more focused than ever on their health, aging well and quality of life. Cities are denser, busier and more diverse than ever before.

As real estate investors we have a unique role in shaping cities. To respond to those challenges, we need to adopt a long-term, inclusive and sustainable approach. Inclusion and social impact are integrated into our performance objectives and represent a strategic priority for us.

When we analyze a prospective transaction, we look at factors like health and safety, wellness, access to services, public transportation and community engagement, and we have created a system of accountability that links social performance to financial incentives. The managers that we partner with are rewarded according to how they deliver on sustainability KPIs through the “promote,”

We are now putting that system into operation, and in the last 12 months we have evaluated our first investments on that basis and tied that performance to the payment of fees to the manager. We have also initiated supply chain.

How does creating a more inclusive culture within a company contribute to better investment performance?

SM: A more diverse workforce leads to better corporate decisions, fosters innovation, increases resilience and makes you better equipped to navigate uncertain times. We have a broad range of DEI (Diversity, Equity and Inclusion) objectives embedded within our company’s annual KPIs. We have set up a team in charge of social impact and inclusion.

In the past 12 months we have achieved EDGEplus, a global certification for gender equity and intersectional equity. There are also three employee resource groups at Ivanhoé Cambridge, which drive inclusive changes: Pride (LGBTQ2S+), BIPOC and Women IC.

Last year, we became a signatory to the Institutional Limited Partners 'Diversity in Action' initiative. It encourages the adoption of best practices in diversity and inclusion, the reflection of those priorities in corporate culture, and the collection and analysis of demographic data. We actively encouraged our partners worldwide to join us by signing up too. To date, 20 percent of them have already responded to that call, and a further 8 percent are in the process of becoming signatories this year.

We are now taking a closer look at how our buildings are designed and operated, and this, with an inclusive lens. For example, thinking about lighting not just in terms of improved energy efficiency, but also in the way it impacts people of different ages. Our priority is to improve the overall experience and comfort, in terms of wellbeing and inclusion.

Last year we also became an early adopter of the WELL Equity rating. It sits under the WELL certification and gives organizations a framework for action to validate their commitment to improving health, wellbeing, access and diversity. We are currently applying that to our headquarters and hope to obtain this rating by the end of the year.

How are the governance structures against which investors measure ESG performance evolving?

SL: We don’t have a separate bucket for impact investing. Instead, we want to be more systematic about how our whole portfolio improves on material ESG factors, and that is where governance comes into play. It is the glue that makes everything possible because it provides accountability and protects against falling into greenwashing or social washing.

For our external partners to do business with us, we must share a common vision on how ESG or sustainability will be integrated into the business plan. We have made progress on setting expectations which create a better alignment of interest both financially and on ESG metrics.

Certifications and benchmarks such as LEED and BREEAM are still necessary, and we will continue to use them, but they are probably no longer sufficient in themselves to monitor and demonstrate sustainability performance. Investors are becoming more sophisticated, and they are demanding more specific performance indicators such as energy use intensity, or forward-looking carbon intensity estimates.

To do that we have adopted CRREM, the carbon risk real estate monitor, to assess the extent to which our assets and portfolio are aligned with a Paris-compliant carbon pathway. GRESB is still very relevant in terms of benchmarking for ESG performance, meanwhile, and for global investors like us it remains the go-to solution. We are influencing our external managers so that they make more and better use of these tools in the way they manage our assets.

Another way of creating better alignment of interest throughout our value chain is by working with our lenders when we borrow money on financial markets. We have taken out C$18 billion ($13 billion; €12.3 billion) of sustainable financing since 2017, about C$15 billion of which is sustainability-linked loans where the cost of the debt is tied to whether we have achieved targets such as reduced carbon intensity or amount of low carbon investments. In May 2023 we issued a C$300 million sustainability bond, which will help finance green assets that we own as well as affordable housing projects.

When are they going to create an EDGEplus certification that incorporates people with disabilities? (just saying, that is the group that is systematically discriminated against the most and none of the pension funds I cover do anything to target hiring them).

Lastly, in related news, CDPQ announced today that Lemay and Fusion Énergie join forces to accelerate the decarbonization of buildings:

Backed by the National Bank, the CDPQ and the Fonds régionaux de solidarité FTQ, Lemay is continuing its growth with the acquisition of the Quebec-based Fusion Énergie, known for energy intelligence solutions to energy management and optimization. By combining their respective strengths, the two companies aim to accelerate the built environment's transition to carbon neutrality.

As 30% of all GHG emissions worldwide can be attributed to the building sector, reducing the energy consumption of our building stock is an essential and economically viable way to achieve carbon neutrality and limit the impacts of climate change. 

Lemay and Fusion’s union represents a major step forward: The result is an integrated offering unique to its market, covering buildings’ entire lifecycles from design to operation. It delivers tangible benefits in both the short- and long-term for both new and existing building stock, with considerable reductions in both energy costs and carbon footprints.

“Combining the power of design with technological innovation will enable us to accelerate our efforts to decarbonize built environments. We’ve already carried out energy simulations at the conceptual stage of our projects, but with Fusion's energy intelligence, we will be able to monitor energy consumption proactively and measurably, make diagnoses, and offer appropriate responses in real-time throughout a building's operation,” explains Lemay’s President Louis T. Lemay.

Applying Fusion Énergie's operational and technical know-how to Lemay's recognized expertise in sustainable design and strategies will improve natural and built environments while promoting the well-being of occupants and creating added value for businesses, building owners and communities.

For Daniel Sarrazin, president of Fusion Énergie, this integration paves the way for extraordinary opportunities for the company he founded and its employees. “As part of the Lemay team, we will be able to extend the reach of our energy intelligence solutions to new markets. We couldn't be happier to join a firm that embodies the same human and environmental values as we do,” says Sarrazin.

“We are proud of our long-time client Lemay that is joining forces with Fusion Energy to have an even greater positive impact. They can count on us to support them with this milestone event as well as their ESG advances and growth ambitions,” stated Patrick-Claude Dionne, Vice-President & Managing Director of National Accounts – Quebec at National Bank.

“CDPQ is proud to be partnered with Lemay since 2014 and to support its growth plans through acquisitions, both here and abroad,” said Kim Thomassin, Executive Vice-President and Head of Québec at CDPQ. “This transaction will promote the development of sustainable solutions in architecture and real estate, while furthering the innovative ambitions of this award-winning Québec architectural firm.”

With this acquisition, Lemay remains focused on its strategic growth objectives, and reaffirms its commitment to creating a positive impact for businesses and the communities it serves through the transformative power of design.

About Lemay

Lemay has been imagining new ways to create spaces that engage users and bring people together since 1957. Over 400 architects, designers, industry leaders and change-makers work tirelessly to cultivate innovation in their own backyards and in communities around the world. Inspired and strengthened by transdisciplinary creativity, the firm has also developed its very own NET POSITIVETM approach to guide teams towards sustainable solutions that shape a better future. With the human experience at its heart, Lemay strives to design with empathy and create spaces to grow. www.lemay.com

About Fusion Énergie

Founded in 1994, Fusion was one of the first companies in Quebec to offer energy saving and control tools. Its seasoned team boasts a wealth of expertise, ranging from energy performance and control systems engineering to the installation, programming, commissioning, and operation of electromechanical equipment. A pioneer in the field of energy intelligence, it offers owners and managers of hospitality, residential, commercial and institutional buildings a unique range of energy management and optimization services. www.fusionenergie.ca

This sounds like the right type of merger, one that is complementary and will allow both companies to work together to grow over the long run under the Lemay label.

Below, watch a clip from LOGOS on the Luhari Logistics Estate, very interesting.

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