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Logistics: JD acquires 26.38% equity of China logistics property with a cost of HK$3.99 billion, reshaping the landscape of the logistics market

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On September 3, Hong Kong-listed China Logistics Property Holdings (CNLP) announced that JD, Mr. Li, and Yupei International has entered an agreement on 1 September, 2021 regarding the acquisition of 916 million of shares (accounting for 26.38% of the issued share capital of the company) by JD for a total cash consideration of HK$3.987 billion, which translates to HK$4.35 per share.

CNLP has 65 logistics parks with a combined gross floor area exceeding 6.2 million square metres (66.7 million square feet) across 45 cities in China. As one of the investors of CNLP, JD boasts a Logistics’ portfolio of nearly 20 million square metres. For JD, which is both an existing investor in CNLP and one of its largest tenants, the potential deal offers a pathway to beefing up its logistics network after the $3.2 billion Hong Kong IPO of its JD Logistics arm in May. 

Colliers View:

Benefitting from the rapid development of the economy and consumption level of residents, the demand for logistics continues to grow, and e-commerce promotes the rapid increase in the demand for express delivery and warehousing. The development of logistics real estate needs the support of land supply. However, due to the low the price of warehousing land and less contribution to the governmental finance, the land supply is limited. By acquiring equity of CNPL, JD could boost its warehouse portfolio by nearly a third without having to go through the increasingly competitive process of acquiring sites and doing development in China. With the increasing difficulty of acquiring logistics land, mergers and acquisitions have become an important way to expand the assets which may further increase the value of logistics real estate assets.