CPPIB Helps Boost GLP Japan Development Fund to Record $2.72B

Thanks to support from some old friends, GLP has raised the largest-ever private fund targeting Japanese real estate, as the warehouse specialist closes on JPY 311 billion ($2.72 billion) for its GLP Japan Development Partners IV vehicle.

The fund manager and builder announced the first closing of GLP JDP IV, the fourth edition of its flagship Japan development fund on Tuesday, with Canada Pension Plan Investment Board (CPPIB) announcing on that same day that it had committed JPY 110 billion to the strategy, which focuses on the Tokyo and Osaka areas as it seeks to build modern warehouses in the country.

“GLP’s ongoing fundraising and business development activities demonstrates the strength and attraction of the logistics market driven by ecommerce and supply chain modernization,” said GLP’s managing director for fund management, Ralf Wessel. “Our recent closings are a testament to the strength of our on-the-ground teams and continued investors’ confidence in GLP’s ability to originate investment opportunities at attractive pricing to support our disciplined growth strategy and drive value through all phases of the asset life cycle.”

With investment yields compressing globally, Japan’s low costs of borrowing and efficient markets have made the country one of the top targets as investors boost allocations to the logistics real estate segment, with GLP competitors ESR, Goodman and CBRE Global Investors also having made fresh commitments to the country this year.

Greener Warehouses

GLP’s new fund is aimed at producing warehouses which are efficient enough to enable e-commerce tenants to meet ever-tighter delivery expectation while also allowing institutional investors to meet sustainability targets.

With this latest addition to its more than $30 billion in assets under management within Japan, GLP plans to incorporate solar panels to offset energy usage and include amenities such as on-site day care facilities that support the wellbeing of workers and local communities.

The company says it aims to obtain LEED, CASBEE and Zero Energy Building (ZEB) sustainability certifications for the projects it develops under the strategy, with more than 80 percent of the warehouses built through its earlier ventures already green-rated, including nine LEED Gold and three LEED Platinum properties.

“GLP JDP IV will feature our flagship ALFALINK projects which promote supply chain optimization by creating modernized, end-to-end, digitalized solutions to help customers meet complex and rapidly evolving supply chain needs,” said GLP Japan president Yoshiyuki Chosa.

These new projects will fit alongside the more than 10 million square metres (108 million square feet) of completed warehouses and pipeline projects already in GLP’s Japan portfolio, with the company pointing to its extensive network in the country as having helped it to acquire more than 70 percent of its projects through off-market transactions.

Helpful Friends

More than 85 percent of the commitments to GLP JDP IV were made by returning investors from the third edition of the fund, including CPPIB, which had joined with GLP to found the strategy a decade ago.

“We are pleased to extend our longstanding partnership with GLP and build on the success of the previous Japan development JVs. The positive outlook for Japan’s logistics sector underpinned by the rapid growth in e‐commerce has laid a solid foundation for the success of the new venture,” said Gilles Chow, head of real estate for North Asia at CPPIB.

Since establishing the original Japan Development Venture in 2011, the partners have teamed up for subsequent editions in 2016 and 2018, with the series having produced 2.7 million square metres of space over the past ten years.

GLP JDP IV attracted over 24 percent more capital than its predecessor vehicle, which closed on JPY 250 billion in equity in 2018 with CPPIB having provided $700 million of that total. With the establishment of the new fund, GLP now manages six logistics strategies in Japan across five private funds and a Tokyo-listed REIT.

CPPIB and GLP have also worked together on logistics ventures in Europe and India, including announcing earlier this year that they were enlarging a European logistics joint venture, which is also backed by British Columbia pension manager Quadreal Property Group, to $4.9 billion.

In 2018, GLP reported that it had established an India logistics partnership with local industrial developer Indospace, which had already established a relationship with CPPIB.

Japan Focus

As CPPIB and GLP look to deploy their fresh capital in Japan they will be competing for projects and tenants with a growing number of global players enticed by a transparent market, low costs of borrowing and the growth of e-commerce.

Hong Kong-listed ESR announced in July that it had expanded its existing Japan development venture with Dutch pension firm APG Asset Manager by JPY 75 billion to bring that fund to JPY 150 billion in equity targetting development opportunities in Japan’s major urban hubs.

Then in August, Australian industrial developer Goodman said that it plans to build a 176,000 square metre distribution centre in Japan’s Ibaraki prefecture near Tokyo. In March, CBRE Investment Management (then known as CBRE Global Investors) said that it had raised $265 million dedicated to Japanese logistics opportunities in conjunction with its latest Asia Pacific value-add fund, which reached a final close on $1.74 billion in capital this month.

Note: This story has been updated to clarify that CPPIB had reportedly invested $700 million into GLP JDP III. An earlier version had indicated that CPPIB had reportedly invested JPY 625 billion. Mingtiandi regrets the error.