Goodman strikes gold for sovereign wealth funds

China’s sovereign wealth fund CIC paid $500 million for its 18% stake in Goodman Group in August 2009. That stake has now doubled in value.

Goodman Group is a $6 billion Australian-listed industrial property developer. It is active in Australia, Europe and Asia and is thinking about a dual-listing somewhere in Asia, as part of its future plans.

It has an annual pipeline of $2 billion of developments, and founder Greg Goodman was in Hong Kong last week to undertake the topping out of its 222,000 square metre, 25 storey Interlink building in the New Territories.

“Interlink cost $400 million to develop and is now worth approximately $600 million, yielding a strong rate of return for investors,” says Goodman, who serves as the group CEO. “We believe it to be one of the top five industrial buildings in the world.”

For example, it has 10,000 metres of warehouse space leased in the building to Chanel. That’s an awful lot of expensive handbags.

Goodman’s investors include big sovereign wealth funds and pension funds. Some 50% of the money for this development came from Goodman itself and 50% from the $2 billion Goodman Hong Kong Logistics Fund.

Goodman invests in this fund alongside the likes of European pension funds APG and PGG, Middle East sovereign wealth funds such as Adia and, locally, the Government of Singapore Investment Corporation.

The fund has returned 15% annual IRR in the last five years.

Goodman sold its half-share in Interlink to the Canadian Pension Plan Investment Board, but continues to participate via its investment in the fund.

The Canadian Pension Plan Investment Board and Goodman have committed a further $500 million each to a new fund which plans to develop properties in China.

The firm has been in China for six years and targets $3 billion to $4 billion of industrial property products in the next decade, and is currently developing $400 million to $500 million worth.