Singapore’s Global Logistic Properties (GLP), in an equal investment with governmental fund China Investment Corporation (CIC), will acquire a Japanese logistics facility portfolio from LaSalle Investment Management of the U.S. The acquisition price is 122.6 billion yen [$1.6 billion]. Domestically, the acquisition may be the largest real estate transaction in 2011.
The transaction targets 15 properties centered on the greater Tokyo area and including such locations as Nagoya, Osaka, Kobe and Hiroshima. They are major properties from “Japan Logistics Fund I,” established by LaSalle in 2004, with an aggregate gross floor area of 770,000 m2. The properties are mainly large-scale, multi-tenant logistics facilities such as Logi Port Kawasaki (GFA of 160,000 m2, including retail floors) and Logi Port Osaka (GFA of 135,000 m2).
Third party logistics (3PL) companies occupy 67% of the floor area, while 13% is occupied by electronic commerce tenants. The occupancy rate is 98.3%, and the remaining durations of lease contracts, on a weighted average, is 5.6 years.
Concerning the portfolio acquisition, GLP and CIC plan to each invest 21.2 billion yen [$260 million], and the remaining funds will be procured through a syndicate loan from Japanese banks. The loan to value ratio is approximately 65%, and the cash on cash yield after the borrowings will be 12%.
GLP is a real estate company specializing in logistics, invested in by the Government of Singapore Investment Corporation (GIC), handling development and operation in both Japan and China. GLP was listed on the Singapore Exchange in October 2010 and the Japanese arm is known as GL Properties, based in Minato-ku. As a result of the acquisition, GLP owned logistics facilities in Japan will have an aggregate gross floor area of 3.6 million m2, which ensures GLP’s number one position in Japan.
CIC, which became the joint investment partner with GLP, is a Chinese governmental fund that manages foreign currency reserve assets worth over 20 trillion yen [$250 billion]. CIC is also known for their investments in Morgan Stanley and Blackstone.
In September 2011, GLP also announced plans to develop logistics facilities on a scale of $1.4 billion (approximately 107 billion yen) in Japan with Canadian public pension fund Canada Pension Plan (CPP). In addition, though details have not been announced, GLP has established their own J-REIT, GLP Investment Corporation, registered with the Kanto Local Finance Bureau of the Ministry of Finance.
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