e-Shang Redwood pulls pin on Goodman Group deal

Private equity-backed Asian logistics player ­­e-Shang Redwood has trimmed its bold plan to buy three portfolios of Australian industrial property worth almost $1 billion as an entry into the local market.

The group, formed by the merger of two of Asia’s top developers, e-Shang Cayman and the Redwood Group Asia, had planned to buy about $600 million in property from funds controlled by the Goodman Group in an ­off-market play.

Redwood last year emerged as the top contender for a portfolio of Goodman assets being sold off-market via CBRE and JLL, as well as another collection of assets being sold by JPMorgan Asset Management through Colliers International and CBRE.

Investment surge: Singapore ramps up Australian logistics raid

While e-Shang Redwood is understood to have ended talks with Goodman, it is deeply committed to getting into the Australian market and the signs are positive for the JPMorgan transaction.

The initial Goodman portfolio included assets in Queensland, South Australia and Victoria but most assets were concentrated in Melbourne

The group could use that portfolio as a base for its ambitions, which extend to development in Australia.

The pullback from the Goodman portfolio may reflect Redwood’s desire to allocate capital to other markets ahead of a planned IPO.

The newly created group said last month it wanted to bulk up ahead of its float and having an Australian platform would round out its Asian holdings.

The Federation Distribution Centre in Melbourne was among the portfolios being targeted by e-Shang Redwood. Picture: Goodman Group.

The Goodman portfolio is viewed as among the highest quality to be made available in this property cycle and will be keenly sought by other buyers, particularly real estate investment trusts and property companies from Asia.

Industry executives are tipping a new wave of investment from Hong Kong companies seeking to emulate their Singaporean rivals in forging into local warehouse and logistics properties.

The initial Goodman portfolio included assets in Queensland, South Australia and Victoria but most assets were concentrated in Melbourne.

Major assets included Westlink Distribution Centre, Federation Distribution Centre, Boundary Distribution Centre, Healey Industrial Estate and Woodlands Distribution Centre.

In Queensland, the Crestmead Distribution Centre was included and in South Australia the Purling Distribution Centre was available.

The Goodman portfolio’s spread and the offer of another 41,000sqm of expansion lands also sparked offshore interest.

This article originally appeared on www.theaustralian.com.au/property.