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Goodman expands Greater China relationship with CPPIB

Thursday, 30 June 2011

Goodman Group (Goodman or Group) is pleased to announce the acquisition by Canada Pension Plan Investment Board (CPPIB) of the Group’s 50% interest in the Hong Kong Interlink Project.

Interlink is a development project currently being undertaken on a 50/50 basis between the Group’s Hong Kong Logistics Fund and Goodman. CPPIB has agreed to acquire Goodman’s 50% interest in Interlink on a “fixed price” basis for HK$2.26 billion and will fund its share of the development until completion.

Goodman announced the development of Interlink, a landmark 2.4 million sq ft warehouse and distribution centre in the Tsing Yi port district in December 2009. The project is the first major logistics facility to be developed in Hong Kong in almost a decade and one of the largest industrial developments currently being undertaken anywhere in the world. Pre-commitments (including Heads of Agreements) of 81% of the gross lettable area have been secured to date, with major global customers including DHL Supply Chain and Yusen Air & Sea Services. The project is on schedule for practical completion in January 2012, and on completion will have a value in excess of HK$4.5 billion.

Goodman Group CEO, Greg Goodman said, “Interlink is a world class development and we are delighted to be expanding our relationship with CPPIB with this new investment. Significantly, the transaction will help to drive the Group’s growth strategy in the region, providing capital for reinvestment in new opportunities across Greater China, specifically in our targeted cities of Shanghai, Beijing, Chengdu and Chongqing.”

Graeme Eadie, CPPIB’s Senior Vice President, Real Estate Investment, said, “This is CPPIB’s first direct real estate investment in Hong Kong and a rare opportunity to acquire a significant interest in a prime industrial asset at the centre of Asia’s largest transportation and logistics hub. Interlink is well positioned to attract leading, global tenants seeking a large-scale, modern facility in Hong Kong, where the supply of industrial space is severely constrained and rental demand is consistently strong.”

Mr. Eadie added, “Our investment in Interlink is aligned with CPPIB’s global real estate investment strategy of acquiring assets that can be expected to deliver stable returns over the long-term and working closely with strong, reputable partners who have deep local knowledge and experience.”

Goodman will provide asset management, development and property services on terms generally consistent with existing arrangements across our current fund management platform.

Goodman Hong Kong Logistics Fund (GHKLF) will retain its 50% interest in Interlink. GHKLF comprises a small number of large institutional investors and has delivered consistently strong returns of 13% p.a. since its inception in 2006. It currently manages 13 completed industrial assets with 98% occupancy.  Total third party assets under management are valued at HK$12 billion, making Goodman the largest industrial landlord in Hong Kong.

Greater China is one of the fastest growing regions globally and with a team of more than 240 people across its Hong Kong and China operations, Goodman is well positioned to capitalise on the strong customer demand for logistics solutions.

Goodman’s Managing Director, Greater China, Philip Pearce said, “Customer demand for prime logistics space in Greater China continues to exceed supply and our people are very focused on procuring land and securing development opportunities in response to the strong demand. Goodman currently has the ability to deliver over 4.3 million sq ft of space through commenced developments and secured land sites in China and we are forecasting this to increase to in excess of 6.5 million sq ft by FY2013.”

“Our Hong Kong portfolio is performing extremely well, with over 5 million sq ft of space leased during FY2011. Portfolio occupancy has increased significantly, rising from 93% to a two-year high of 98%, with customer demand being supported by rising import and export volumes and an 18.3% increase in local retail sales. We are confident on the outlook for rental growth and anticipate this strong operational performance to continue, with limited net supply of new warehousing and logistics space expected over the medium term.”

The growth expected from Goodman’s development and management activities over the short-term, together with the significant activity across its international operations, will drive growth in the Group’s total assets under management. This is forecast to increase from HK$145.8 billion (A$17.7 billion) currently, to more than HK$165.0 billion (A$20 billion), with Greater China being a major driver.

- Ends -

Besy Leung
Marketing Director, Asia
Tel + 852 2249 3149

Financial Dynamics
Phoebe Ho
Associate Vice President
Tel +852 3716 9832

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