LaSalle Investment Management has announced the launch of a Japan-focused property fund seeded with six assets purchased for JPY 105 billion ($965 million), as the independent fund management subsidiary of JLL continues to ramp up its presence in the country.
The private open-ended core real estate fund, known as LaSalle Japan Property Fund, has raised JPY 61 billion in equity commitments from Japanese investors fortified with loans extended by major Japanese financial institutions that extend the vehicle’s acquisition capacity.
LaSalle Japan Property Fund will target core properties primarily in Tokyo, Osaka, Nagoya and Fukuoka across the office, industrial, retail and multifamily sectors.
“We are excited to launch our first private open-ended core fund in Asia with a sizeable initial portfolio that, given its high asset quality, potential to generate strong recurring cash flows and desirable locations, directly aligns with the vehicle’s investment parameters,” said Mark Gabbay, CEO of LaSalle Asia Pacific.
The fund launch comes seven months after the US real estate investment manager opened the 296,780 square metre (3.2 million square foot) Logiport Kawasaki Bay, the largest logistics facility ever in Japan, which it developed in partnership with Mitsubishi Estate and Nippo, and is held by the Mitsubishi Estate Logistics REIT.
Targeting Stable Income Generation
“Japan’s large, transparent real estate market is one we know very well, providing us with a sustainable competitive advantage as we invest into core assets,” said Gabbay, adding that the fund advances the company’s Asia Pacific strategy of targeting core assets with stable income generation across a diverse range of real estate investments.
The initial portfolio of six properties, which have not yet been revealed publicly, were selected based on LaSalle’s research and strategy framework that takes into account factors such as demographics, technology and urbanization.
“Strong market fundamentals across Japan, combined with transparent capital markets, depth of existing stock and high barriers-to-entry make the core real estate market a compelling strategy in the current environment,” said LaSalle Japan Property Fund’s fund manager Ryota Morioka.
Morioka added that the fund would leverage the company’s existing relationships in Japan.
Building on an Existing Footprint
“The creation of the LaSalle Japan Property Fund following the launch of the publicly traded J-REIT in 2016 – LaSalle Logiport REIT – enhances our products with core investment strategies in Japan,” said Keith Fujii, CEO of LaSalle Japan.
Fujii highlighted LaSalle’s opportunistic investments expertise and asset development capabilities, adding that the company is a strong believer in the long-term potential of the Japanese real estate market.
After listing its LaSalle Logiport REIT in 2016, the company has expanded its Japan-focused logistics portfolio in Japan to 16 properties at a total acquisition value of JPY 245.6 billion.
Just six months ago, the REIT announced the acquisition of three high-spec logistics facilities – two in Tokyo and one in Osaka – for a combined JPY 22.87 billion, as well as two parcels of leasehold land in Osaka and Tokyo for JPY 5.52 billion.
At the same time, the REIT manager announced the sale of a Logiport facility in Tokyo for JPY 7.7 billion to an undisclosed buyer.
Ramping Up APAC Portfolio
LaSalle’s renewed emphasis on Japan coincides with the company’s logistics-focused drive in mainland China, as the firm moves to capitalise on China’s e-commerce-fueled demand for new warehouses.
Just five months ago, the company broke ground on five new logistics developments that will deliver 359,000 square metres of new warehouse space to China by July next year.
The set of high-spec sheds will bring the investment manager’s portfolio of completed “Logiport” brand facilities to over one million square metres of gross floor area in the mainland.