Another $2 billion could be headed into Japan’s logistics real estate markets over the next three years following a new agreement between Global Logistic Properties (GLP) and the Canada Pension Plan Investment Board (CPPIB).
GLP, which is already the region’s biggest warehouse developer, signed the deal with CPPIB following an earlier joint venture with the Canadian pension fund, as the two parties look for opportunities to ramp up their platform in Japan.
Canadians Sign Up for a Second Fund with GLP
“The demand for modern logistics facilities in Japan remains very strong and we are delighted to have the opportunity to partner with CPPIB once again,” GLP chief executive Ming Z Mei said in a statement. “The market landscape has evolved since the launch of our first Japan development fund more than four years ago and we feel it is a good time to lock in long-term capital.”
The two parties will each hold fifty percent of the new vehicle, GLP Japan Development Venture II (GLP JDV II), and initial equity commitments total JPY100 billion ($873 million), according to a statement from GLP. The two parties expect to commence construction of new projects in 2016, and that capital commitments to GLP JDV II will reach $2 billion over the next three years.
GLP JDV II will be seeded with the GLP Nagareyama project, a large-scale logistics park in Greater Tokyo providing 319,000 sqm (3.4 million sq ft) of total gross floor area. Announced in October of last year, GLP Nagareyama will the company’s largest development project in the country, expected to be constructed in phases at a total investment cost of JPY59 billion (US$515 million).
Building a Portfolio That You Can Sell to Your Own REIT
According to GLP, part of the new fund’s investment strategy involves the opportunity to sell assets from the fund’s portfolio to GLP J-REIT, Japan’s second-largest logistics REIT by market capitalisation.
This latest fund follows the success of GLP Japan Development Venture I (GLP JDV I), which GLP launched with CPPPIB in September 2011 and expanded twice since. GLP JDV I has reached 92% of its investment capacity, with US$2.4 billion of projects in various stages of development.
M3 Capital Partners (HK) Limited served as exclusive financial advisor to GLP in connection with the formation of GLP JDV II.