AMB Invests $1B in China Through New JV

The global industrial real estate developer and operator has established AMB China Logistics Venture I with HIP China Logistics Investments Ltd. to invest in logistics properties in prime locations.

March 17, 2011
By Barbra Murray, Contributing Editor

Courtesy Flickr Creative Commons user Ivan Walsh

China’s industrial real estate market is high on AMB Property Corp.’s radar. The global industrial real estate developer and operator has established a new joint venture, AMB China Logistics Venture I with HIP China Logistics Investments Ltd. to invest as much as $1.1 billion in logistics properties in prime locations across China.

Why China? As Guy F. Jaquier, AMB president, Europe & Asia and president, Private Capital, noted, China, while home to six of the busiest ports in the world, is sorely lacking in Class A distribution facilities. Out of the country’s 5.9 billion square feet of storage space offerings, modern logistics facilities account for a mere 62.4 million square feet, according to a fourth quarter 2010 report by commercial real estate services firm CB Richard Ellis Inc. And the shortage of accommodations is reflective in rental rates.

Jacquier said that growing demand for logistics space has spurred steady growth of prime Chinese industrial rents during the fourth quarter, with increases ranging from 1.3 percent quarter-over-quarter in Guangzhou and 4.9 percent quarter-over quarter in Beijing.

AMB China Logistics Venture I will use its billion-dollar coffer to develop and acquire properties in the key regions of the Yangtse River Delta, the Bohai Bay Area, the Pearl River Delta and Western China, for starters. The joint venture will also operate assets. Investments will be made over a four-year period.

AMB will supply $88 million of the joint venture’s overall equity of $588 million, and the company will help get the partnership’s portfolio off the ground with the contribution of much of its existing portfolio in China, including operating properties, under-development projects and land.

Earlier this month, the company announced the launch of a $648 million joint venture with Allianz Real Estate. AMB and Allianz will mine the Eurozone’s seaport, airport and distribution markets for global trade-associated logistics real estate opportunities.