Actis sells South Korean logistics centres29/04/19

Actis has sold two logistics centres located in the Incheon Terminal Logistics Complex, Incheon, South Korea, to a large institutional investor. The centres are currently c.90% occupied.

The divested properties represent one of the seven seed assets of Standard Chartered’s Principal Finance Real Estate business, which was acquired by Actis in August 2018. Since the acquisition, Actis has continued to lease the centres to leading Korean and Chinese e-commerce retailers.

Actis’ team partnered with GS Retail Co., Ltd. (“GSR”), a major Korean retailer and logistics operator, and ICB, a growing cross border e-commerce payments and logistics company, to originally develop the two adjacent, Grade A logistics centres in Incheon, which is located in the west region of Greater Seoul. The site offers proximity to both Incheon International Airport and Western Seoul via key transportation nodes, ideal for logistics operations.

The properties were specifically designed to capitalise on growing demand from e-commerce and retail operators by offering a cost-effective solution. Actis’ team acquired the two sites in February 2017 and completed the construction of two four-story modern logistics buildings with total GFA of 85,602m2 in April 2018.

Brian Chinappi, head of Actis’ Real Estate business in Asia said: “This is another transaction exemplifying the success of our ‘build to core’ strategy. We develop assets with a dual focus on both occupier demand and investor demand for the institutional quality cash flows the properties generate. We had strong interest from multiple buyers, including both domestic and international institutional investors.”

The South Korean economy continues to grow, driven by a cross sector increase in exports contributing to an annual GDP growth estimate of 2.5%. Korean logistics centres are an attractive asset class driven by the rapidly growing e-commerce sector and resilient international trade flow. Korea reached its highest ever trade volume last year reaching over US$ 1.14 trillion.

Asian real estate is a compelling investment opportunity with scale and supported by secular tailwinds: demographic shifts, digital disruption, deficient supply and demand for yield. Before this transaction, Actis’ Asian real estate portfolio included seven investments across China, India, and South Korea, each investing with and targeting strategic value to high-quality operating partners, across diverse property types.