Macquarie Goodman fund raises HK$2.7 billion

The logistics fund is the largest owner of warehouse and distribution properties in Hong Kong.
The Goodman Group has raised HK$2.7 billion ($346 million) in equity and debt capital for the Macquarie Goodman Hong Kong Logistics Fund.

The fund is an unlisted property trust investing in prime industrial assets throughout Hong Kong. It is focused on providing investors and customers with both a geographically and functionally diverse portfolio concentrating on logistics and warehousing properties. It is jointly run by integrated property developer Goodman and the Macquarie Group, both based in Australia.

The capital raising for the fund will pay for a 50% stake in the Strategic Interlink and Seaview development projects, purchased jointly from Goodman and Macquarie for HK$900 million and to fund its share of development costs associated with both projects.

The two development projects will provide a combined 340,000 square metres of warehouse and distribution space, with a forecast value in excess of HK$7 billion ($897 million).

The completion of this transaction will in turn allow the fund to pursue a core plus investment strategy, which includes a measured component of enhanced return investment opportunities, including developments.

Out of the total capital raised, HK$1.6 billion ($205 million) came from investors, including Goodman and Macquarie. Half of the capital raised will be drawn-down initially, with the remaining 50% to be drawn over the life of the two developments û anticipated to be over three years. Following the initial drawdown, GoodmanÆs cornerstone investment in the fund will increase from 20.0% to 20.3%.

Meanwhile, HK$1.1 billion ($141 million) of senior debt was arranged through a new five-year facility from existing and new lenders, providing the fund with additional liquidity and flexibility to enhance the existing portfolio and pursue strategic growth opportunities.

In addition, a further HK$1.1 billion ($141 million) of senior debt due to expire in March 2009 was refinanced until September 2011. These initiatives have increased the fundÆs weighted average debt expiry from 1.8 to 3.2 years.

The transaction will initially reduce the fundÆs senior debt gearing level to around 33% from 34% currently, with an average forecast gearing level of 34% over the three-year development period.

The fund was launched in April 2006 and is focused on the Hong Kong industrial property sector. Since the fund's launch, its portfolio has grown from seven properties to now comprise 18 properties (before completion of the Seaview and Interlink development transaction) and is the largest owner of warehouse and distribution properties in Hong Kong. It is an open-end industrial sector specialist fund that benefits from Goodman Group's and Macquarie Group's in-house development capabilities, asset management expertise and global fund management platform.

Goodman is a global integrated property group and specialist real estate fund manager with total assets under management of A$18.6 billion ($12.8 billion). The groupÆs suite of listed and unlisted property funds domiciled across Europe and Asia-Pacific are supported by a team of more than 1,240 property professionals with comprehensive expertise in fund management, property development and property services. Goodman Group holds cornerstone investments in many of its funds, directly aligning its interests with those of its equity partners.
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