Prologis Selling Greater Tokyo Shed to Japan REIT for $260M

Logistics giant Prologis has agreed to sell a five-storey warehouse in Chiba prefecture to the group’s Tokyo-listed REIT for JPY 39 billion ($260 million).

Nippon Prologis REIT is exercising its exclusive negotiation rights to acquire Prologis Park Yachiyo 1, the trust’s manager said Friday in a stock filing. The 2022-vintage facility developed by San Francisco-based Prologis is in the city of Yachiyo, Chiba, roughly midway between central Tokyo and Narita Airport.

The $6.1 billion trust is picking up the 132,683 square metre (1.4 million square foot) shed at a net operating income yield of close to 4 percent based on annual rent JPY 1.87 billion.

“NPR believes the acquisition of the new property will further improve the earnings stability of its portfolio by enhancing property and customer diversification as well as diversification of the expiration date of lease agreements at its properties, continuing investments in a well-balanced portfolio of properties and adding relatively newly built Class A logistics facilities with longer average remaining lease terms,” the manager said.

Fully Occupied Facility

The consideration of JPY 39 billion for Prologis Park Yachiyo 1 is in line with the shed’s independent appraisal value and translates to JPY 293,934 ($1,957) per square metre of leasable area.

The facility is fully occupied by nine tenants, including third-party logistics operators NTT Logisco and Daiichi Freight System, and carries a weighted average lease expiry of 5.6 years. The property is meant to be integrated with Prologis Park Yachiyo 2, which is under development on an adjacent piece of land.

“Therefore, prior to acquiring this property, NPR agreed with the seller, who is also the owner of the adjacent land and the developer of Prologis Park Yachiyo 2, on the shared use of passage and facilities within the premises, as well as the establishment of an easement for passage on this property,” the manager said.

NPR will finance the acquisition of Prologis Park Yachiyo 1 with cash on hand and JPY 29 billion in loans from a syndicate of Japanese banks, with the deal expected to close on 2 December.

Giant Beefs Up

NPR’s latest buy enlarges what is already Japan’s biggest industrial REIT by asset size (JPY 917 billion), with GLP J-REIT (JPY 885 billion) in second place.

The country’s third-biggest industrial REIT formed earlier this month when Mitsui Fudosan Logistics Park completed its merger with Itochu Group-sponsored Advance Logistics Investment Corporation, creating a combined trust with a portfolio of 49 industrial assets valued at JPY 576.5 billion.

As the surviving entity, MFLP absorbed 19 ADL properties, including three anticipated acquisitions of i Missions Park assets from Itochu’s pipeline. The deal gave MFLP a dual sponsorship structure consisting of Mitsui Fudosan, Japan’s largest developer, and trading giant Itochu.