Global Logistic Properties Limited (GLP) and China Investment Corporation (CIC) have entered into a 50-50 joint venture to acquire 15 modern logistics facilities in Japan from LaSalle Investment Management for JPY122.6 billion (or $1.6 billion) in one of the biggest-ever property deals in Japan according to a Wall Street Journal report. This purchase marks the first collaboration between GLP and CIC with each company initially investing about $272.9 million. GLP will act as the asset manager of the acquired properties.
In a statement, LaSalle Investment Management said the deal marked the sale of all but two properties held by its US$1.6 billion Japan Logistics Fund, and reaps "strong returns" for the fund's institutional investors. "Global money has returned to Japan in a big way," said Masahiro Mochizuki, an analyst at Credit Suisse Group AG in a Businessweek article. "This transaction means that real estate prices in Japan have fallen to an attractive level."
GLP chief executive Ming Z Mei said: "Demand in Japan continues to come from companies working to become more competitive and are focused on ensuring they have more efficient warehouses. Companies are also rethinking how their supply chains are managed so they can minimise any risk of disruption. As a result, demand for quality modern warehouse space is on the rise, while there remains a lack of supply of modern warehouses. The properties we are acquiring come with a strong tenant profile - 67% of the space is utilised by large third-party logistics service providers and 13% is leased by e-commerce companies."
The portfolio of 15 properties to be acquired will have a Gross Floor Area (GFA) of 770,989 sqm with more than 90% of the GFA located within the Greater Tokyo and Osaka areas. The current occupancy of the properties is 98.3% with a weighted average lease expiry of 5.6 years. The portfolio comprises modern facilities with a weighted average building age of only 6.9 years.
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