CBRE Global Investors last week announced that it has completed a JPY 140.4 billion ($1.31 billion) sale of all assets from a Japanese logistics portfolio, ending a 3-month-long series of disposals of 169 industrial properties.
Through the piecemeal sale on behalf of an investor consortium including the firm’s CBRE Asia Value Partners IV fund, the Los Angeles-based investment manager was able to achieve a more than 33 percent mark up over the price it had acquired the properties for in 2016, according to a statement from CBRE GI.
The disposal of the 5.6 million square foot (520,000 square metre) portfolio comes as warehouse vacancy in the greater Tokyo area fell to less than 1 percent during the first quarter of 2020, with capital values rising by 5.2 percent compared to a year earlier, according to recent research by JLL.
The rising capital values have driven an ongoing series of investments by international institutional investors, with LaSalle Investment Management and Blackstone both making major moves in Japan’s shed sector within the last 12 months.
Portfolio Sold Piece by Piece
The properties in the portfolio, all of which are leased to heavy vehicle maker Mitsubishi Fuso Truck and Bus Corporation, were reportedly acquired by a number of individual buyers managed by Japanese industrial real estate specialist Unified Industrial, according to a source familiar with the transaction who spoke with Mingtiandi.
Inquiries by Mingtiandi to Unified Industrial representatives remained unanswered at the time of publication.
In its statement, CBRE GI indicated that it had achieved a blended exit cap rate of 5.2 percent on the set of transactions, or 200 basis points less than the 7.2 percent yield established when it acquired the set of properties for JPY 105.1 billion in July 2016.
On a price per unit of area basis, the disposal was conducted at the equivalent of just over JPY 25,000 per square foot.
Strengthening Leasing Profile
The company credited its asset management approach with having improved the leasing profile of the portfolio, which helped to support the successful disposition.
“We actively pursued a strategy involving substantial lease extension and property improvements to enhance the quality of the portfolio,” said Tetsuya Fujita, CBRE GI’s country head for Japan.
Fujita indicated that that his team had extended lease terms and improved covenants to improve the performance of the portfolio, and said that buyers included high net worth individuals and institutional investors.
CBRE GI Looks for More Japan Opportunities
Having disposed of the Mitsubishi Fuso portfolio, CBRE GI executives say they are set to look for fresh acquisition opportunities in Japan’s industrial real estate sector.
“CBRE Global Investors continues to be focused on Japan logistics and are actively deploying capital to opportunities where we can create defensive, core assets through various value-add and development initiatives,” said Adrian Baker, chief executive officer and chief investment officer for the firm’s Asia Pacific operation.
The firm’s competitors have also been ramping up their efforts to invest in more logistics assets in the island nation, with LaSalle Investment Management having in November last year launched LaSalle Japan Property Fund, a strategy targeting core logistics assets, with JPY 61 billion in commitments.
In July of 2019 Blackstone made its own move to grab a slice of Japan’s warehouse market, buying a portfolio of warehouses in the land of the rising sun from Mapletree Investments for JPY 100 million.
In May of last year, pan-APAC logistics group ESR closed on JPY 70 billion ($633 million) in funding for its ESR Japanese Logistics Fund III (RJLF3).
CBRE GI has also bet on logistics in China with the firm having reached a final close of RMB 5.5 billion ($786 million) on the CBRE Logos China Logistics Club Fund with what is now ARA Asset Management’s Logos Property unit just three months ago.