Blackstone has snapped up a portfolio of Japanese warehouses that includes online shopping giant Amazon’s Greater Tokyo distribution centre for around JPY 100 billion ($920 million), as the US investment manager zeroes in on Japanese e-commerce.
Blackstone confirmed that a fund managed by the New York-based company acquired the assets from Mapletree sponsored private equity real estate fund, MJLD.
The purchase further adds to Blackstone’s logistics portfolio, which was given a major boost last month when the company paid $18.7 billion to acquire GLP’s US warehouse portfolio, in the largest private real estate transaction ever.
6 Facilities Including Amazon Fulfilment Centre
With the deal closing on 12 July, the Blackstone-managed fund has acquired six large scale logistics facilities from the Mapletree fund, which is backed by conglomerate Itochu Corporation, according to market sources.
“The transaction is part of the group’s business model and capital management strategy to optimise returns for the investors of our managed private equity funds,” a Mapletree spokesperson told Mingtiandi.
The five-year MJLD fund, which closed in 2014 with JPY 51 billion in committed capital, invests in logistics development assets in Japan, with the Singapore company’s stake in the vehicle amounting to 38 percent.
Expressions of interest were submitted at the end of last year, with Mapletree and Itochu advised on the disposal by JLL.
Located mainly in the Greater Tokyo area, five of the six warehouses are fully leased, with the overall occupancy of the sheds standing at 90 percent, according to market sources.
The portfolio includes Internet shopping titan Amazon’s fulfilment centre for the Greater Tokyo area, a two building facility in the city of Odawara, 80 kilometres southwest of the capital, which has a combined net lettable area of nearly 200,000 square metres.
No further details were made available about the other assets in the portfolio, all of which are described by market sources as large scale facilities in Greater Tokyo tenanted by Japanese third party logistics providers.
Blackstone Builds a Global Logistics Portfolio
Global Co-Head of Blackstone Real Estate, Ken Caplan, said at the time of the asset manager’s GLP acquisition in June that logistics is the company’s highest conviction global investment theme as it builds up a portfolio to meet growing e-commerce demand.
That June deal nearly doubled the size of Blackstone’s industrial portfolio in the US, adding 179 million square feet (16.6 million square metres) of city-based infill facilities to its holdings.
The investment manager has made Japan the target for its most recent logistics buy at a time when online shopping has changed the logistics real estate sector and continues to drive demand.
Reverse Logistics A Game Changer for the Sector
“The investment outlook for the sector is bright, especially given the growing demand for highly automated facilities that can serve major urban areas in short spaces of time. This has further increased with the demands of reverse logistics from e-commerce and the aging population in Japan which is becoming more and more dependent on online shopping for their growing needs,” said Pelham Higgins, JLL’s Head of Industrial Capital Markets in Japan and Korea.
“The shift to online shopping has had a profound effect on logistics real estate infrastructure because unlike traditional retail supply chains e-commerce involves reverse logistics (ie items being sent back), smaller and more frequent deliveries, a rapid move to same day deliveries, and an increase in stock keeping units within existing supply chains.”
These factors have resulted in an even greater need for modern logistics space in Japan, according to Higgins.
The logistics veteran predicts that these trends will continue across Japan and globally, with what he calls the “next frontier” being the emergence of last mile logistics driven by the growing need for urban infill logistics facilities to cater for same-day deliveries and also for the distribution of perishable non-discretionary goods as people in Japan shop less regularly at retail outlets.
Mapletree’s Second Japan Shed Disposal in 3 Months
Mapletree’s disposal to Blackstone comes three months after the company’s Singapore-listed REIT, Mapletree Logistics Trust, sold a portfolio of five Japanese warehouses to Godo Kaisha T&C for JPY 17.52 billion.
The trust said in a statement that it had sold the 87,871 square metre portfolio because the facilities, which were completed between 2005 and 2007, had a limited future income growth and a lack of redevelopment potential.
According to the most recent market data from JLL, the average vacancy rate for logistics real estate in Greater Tokyo was 4.1 percent at the end of the first three months of the year, unchanged from the previous quarter, while average rent stood at JPY 4,251 per tsubo (3.3 square metres) per month, a 0.8 percent growth compared with the last three months of 2018.