Cadillac Fairview partners with Gateway Capital to create $1 billion logistics fund

Dubbed Gateway Capital Urban Logistics Partnership (GULP), the investment vehicle will focus on established real estate in urban industrial and logistics markets with value-add opportunities and development plays.

Cadillac Fairview, which has CAD$40 billion (AUD $44 billion) in assets under management (AUM), has also agreed to take a stake in Gateway’s investment platform - joining global property manager Grosvenor Group as investors.

“We are delighted to be partnering with Cadillac Fairview on the GULP strategy, whilst also welcoming them to Gateway Capital as a shareholder. The global expertise and broad investment capability of Cadillac Fairview provides significant strategic value to Gateway Capital, supporting the Company as we execute our real estate strategies,” Gateway Capital co-founder and CEO Stuart Dawes said.

“We believe strongly in the urban industrial and logistics markets and are confident that our track record and deep experience in these markets will identify assets where we can add value to create attractive core assets and ultimately deliver strong investor returns. The GULP strategy is well set to take advantage of these opportunities.”

Founded by Dawes and Peter McDonald in 2021, Gateway Capital is an investment manager focused on creating core assets in the industrial, logistics and office sectors. As at 31 December 2022, the firm has roughly $420 million in assets under management.

Before starting the firm, Dawes spent almost three years as managing director and CEO of Propertylink Group, leading the company to manage more than $2 billion in AUM as it headed into IPO in 2016. Two years later, the group would be acquired by Hong Kong-based private-equity logistics platform ESR for $723.4 million. Post-acquisition, Dawes worked with ESR for two years as a managing director and senior advisor.

McDonald spent more than a decade at Propertylink as chief investment officer, and prior to that held roles with commercial real estate firm JLL, LendLease (ASX: LLC), Dexus (ASX: DXS) and Valad Property Group.

“Never have we witnessed such low vacancy rates in the Australia industrial and logistics sector. This is driven by the supply constrained market, which is further being impacted as new developments are delayed, whilst demand remains strong. This dynamic has led to unprecedented rental growth over the past 24 months, which is expected to continue in the short to medium term,” McDonald said.

“The trend of e-commerce continues to represent a large proportion of the occupier demand, evidenced by these users accounting for 46 per cent of all floor space leased in Australia in 2022. This is forecast to continue with e-commence penetration rates estimated to grow from 13 per cent currently to 17 per cent over the next four years.

“The strong thematic of the sector, coupled with our active and dynamic approach across both existing assets and new development opportunities, places Gateway Capital in a great position to take advantage of this market. Gateway Capital will continue the approach of driving value from assets that are underutilised and under managed.”

The partnership with Gateway Capital marks Cadillac Fairview’s second direct investment in Australia, and comes five months since it agreed to its partner with Hines to develop and acquire up to $1.5 billion of assets in the Australian Build-to-Rent (BTR) sector.

Owned by the Ontario Teachers' Pension Plan, Fairview manages in excess of $40 billion of assets across the Americas, Europe and Asia.

“Our partnership with Gateway Capital marks our second direct investment in Australia, and we are excited to work alongside such a high-quality management team,” Cadillac Fairview Regional Head of APAC Karl Kreppner said.

“The industrial and logistics sector continues to be highly attractive with strong fundamentals, and the changing.”