OTPP and Partners Expand Australian Industrial Sector Portfolio
An unnamed Asian sovereign wealth fund has committed to Gateway Capital’s Australian industrial real estate investment partnership.
The open-ended, value-add Gateway Capital Urban Logistics Partnership (GULP), backed by the Ontario Teachers’ Pension Plan, was launched in April last year.
Stuart Dawes, Gateway Capital CEO and co-founder, said: “The broader capital base increases our dry powder, allowing us to continue to seek additional assets for the GULP portfolio, with a focus on inner urban core plus and value add opportunities on the east coast markets of Australia.”
Dawes told IPE Real Assets with the additional investor the vehicle would now exceed its original target of A$1bn (€606m) in assets under management.
GULP is acquiring an infill Sydney logistics asset in Chullora in Sydney’s northwest from a Sydney asset manager, Fife Capital. The sale price was not disclosed but thought to be “north of A$110m”.
Peter McDonald, Gateway Capital CIO and co-founder, said: “Chullora is the centre of the dartboard of the Sydney urban infill logistics market, being the geographical centre of Sydney.”
Jun Ando, head of Asia-Pacific real estate at Ontario Teachers’, said: “The acquisition complements our existing portfolio, and we’re pleased to be expanding our partnership.
Last week, OTPP issued a press release stating the Gateway Capital Partnership is expanding its industrial sector portfolio:
- Gateway Capital, in partnership with Ontario Teachers’ Pension Plan and an Asian Sovereign Wealth Fund, acquires 2-34 Davidson Street, Chullora through the Gateway Capital Urban Logistics Partnership (GULP) vehicle
- Capital base expanded with the introduction of an Asian Sovereign Wealth Fund
Gateway Capital Urban Logistics Partnership (‘GULP’), an investment vehicle between Ontario Teachers’ Pension Plan (‘Ontario Teachers’), an Asian Sovereign Wealth Fund, and Gateway Capital, has exchanged contracts for the acquisition of an infill Sydney logistics asset located at 2-34 Davidson Street, Chullora. Located in a prime Sydney urban industrial and logistics precinct, the asset, which has recently undergone an upgrade and expansion, provides 25,846 sqm of prime GLA and is leased to Shriro Australia and Two Providores.
Chullora is located approximately 13km west of the Sydney CBD, and 12km northwest of Sydney Airport. With the benefit of recent major road infrastructure upgrades across Sydney, the asset benefits from unparalleled proximity to Sydney’s metro catchments, rating as one of the strongest locations to reach the household population within a 30-minute drive time.
GULP was established in April last year with a cornerstone investment by Ontario Teachers’. Early this year the equity base of GULP was expanded through the introduction of an Asian sovereign wealth fund, providing additional capacity to seek attractive investment opportunities. The acquisition of Chullora adds key Sydney exposure to GULP, which now has over $520m in assets across the east coast markets.
GULP has a focus on inner urban core plus and value add assets on the east coast markets of Australia that are forecast to benefit from strong tenant demand linked with the growth of e-commerce and population, together with other structural tailwinds supporting the industrial and logistics sector.
Stuart Dawes, Gateway Capital CEO and Co-Founder commented:
“The acquisition of this asset complements the existing GULP portfolio, not only providing exposure to the key Sydney market, but also adding strong core plus exposure in a premium asset with strong rental upside.
We are delighted to welcome the addition of an Asian sovereign wealth fund to GULP alongside Ontario Teachers’. The broader capital base increases our dry powder, allowing us to continue to seek additional assets for the GULP portfolio, with a focus on inner urban core plus and value add opportunities on the east coast markets of Australia.”
Jun Ando, Head of Asia-Pacific Real Estate at Ontario Teachers’ Pension Plan, said:
“With strong sectoral tailwinds and market fundamentals, we see positive demand and continued growth potential in the Australian industrial and logistics sector. The acquisition complements our existing portfolio, and we’re pleased to be expanding our partnership as we look ahead to identifying opportunities for future collaboration.”
Peter McDonald, Gateway Capital Chief Investment Officer and Co-Founder, said:
“Looking at market dynamics, this is a moment in time to be very discerning around location and asset quality. Chullora is the centre of the dartboard of the Sydney urban infill logistics market, being the geographical centre of Sydney. It’s an area we have conviction around, and there is currently much higher tenant demand in the infill markets compared to big box warehousing on the outskirts. This market segment is where we see the most growth and will continue to pursue like we have for many years.”
About Gateway Capital
Gateway Capital is an Australian based investment management business focused on creating core assets in the industrial and logistics sectors through active management and development. Founded in 2021, Gateway Capital works exclusively with institutional investors to drive value from real estate through defined investment strategies. Including assets on which Gateway Capital has exchanged contracts, Gateway Capital has approximately $1bn of assets under management at 30 June 2024.
Visit www.gatewaycapital.com.au for more information.
About Ontario Teachers’
Ontario Teachers' Pension Plan Board (Ontario Teachers') is a global investor with net assets of $255.8 billion as at June 30, 2024. We invest in more than 50 countries in a broad array of assets including public and private equities, fixed income, credit, commodities, natural resources, infrastructure, real estate and venture growth to deliver retirement income for 340,000 working members and pensioners.
Our more than 450 investment professionals operate in key financial centres around the world and bring deep expertise in a broad range of sectors and industries. We are a fully funded defined benefit pension plan and have earned an annual total-fund net return of 9.3% since the plan's founding in 1990. At Ontario Teachers', we don't just invest to make a return, we invest to shape a better future for the teachers we serve, the businesses we back, and the world we live in. For more information, visit otpp.com and follow us on LinkedIn.
It's Monday, will keep my remarks short on this deal.
OTPP has successfully transitioned Cadillac Fairview's international team internally and they are doing what they have to do, diversifying the massive real estate portfolio away from Canada one deal at a time.
They're doing this with strong strategic partners (like Gateway Capital) in the right sectors (like logistics) to move away from Retail and Office where they remain overly concentrated, for now.
This GULP deal in Australia acquiring an infill Sydney logistics asset in Chullora in Sydney’s northwest is exactly what OTPP and others are looking for, premium logistics assets in top cities.
I like what Stuart Dawes, Gateway Capital's CEO said:
"The acquisition of this asset complements the existing GULP portfolio, not only providing exposure to the key Sydney market, but also adding strong core plus exposure in a premium asset with strong rental upside."
And Peter MacDonald, CIO and co-founder of gateway Capital:
"Looking at market dynamics, this is a moment in time to be very discerning around location and asset quality. Chullora is the centre of the dartboard of the Sydney urban infill logistics market, being the geographical centre of Sydney. It’s an area we have conviction around, and there is currently much higher tenant demand in the infill markets compared to big box warehousing on the outskirts. This market segment is where we see the most growth and will continue to pursue like we have for many years."
Lastly, Jun Ando, Head of APC Real Estate at OTPP:
"With strong sectoral tailwinds and market fundamentals, we see positive demand and continued growth potential in the Australian industrial and logistics sector. The acquisition complements our existing portfolio, and we’re pleased to be expanding our partnership as we look ahead to identifying opportunities for future collaboration."
No doubt there will be more opportunities down the road to invest alongside Gateway Capital in premium Australian logistics properties.
Below, Sass J-Baleh, Head of Industrial & Logistics Research Australia and Director of NSW Research, CBRE presents a research update on the sector (November 2021 but still worth listening to her insights).
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