The Canada Pension Plan Investment Board (CPPIB) is to make its first investments in Japan through a $500 million joint venture with Singapore-listed Global Logistics Properties (GLP).
CPPIB and GLP jointly announced that they would each commit $250 million to the partnership.
Called the Japan Development Fund, the partnership is expected to be used to invest in the development of multi-tenant and built-to-suit properties predominantly in the greater Tokyo and Osaka areas. A site in Tokyo has already been identified as an initial development.
The partnership has been structured as an open-ended vehicle although the capital is expected to be deployed within a three-year window. The partnership is expected to invest in projects deploying leverage at a loan-to-value ratio of 50 percent.
Jeffrey Schwartz, deputy chairman and chairman of the executive committee of GLP, said the partnership with CPPIB would be its exclusive vehicle for logistics developments in Japan. Describing the tie-up as a long-term strategic partnership that would enable it to “earn solid returns on its capital while managing risk”, he said: “We are seeing solid demand for logistics development in Japan driven by our strong customer relationships, solid track record and deep experience.”
GLP already has a sizeable footprint in Japan and is reportedly close to increasing it further after entering into exclusive talks to buy a $1.8 billion logistics portfolio from an investment fund of Chicago-based LaSalle Investment Management in July. The completion of that deal is yet to be announced.
On CPPIB’s part, the partnership constitutes the second time the state fund has used a logistics joint venture to enter a new Asia market in a matter of months, having acquired for C$285 million a 50 percent stake in The Goodman Group’s Hong Kong Interlink logistics development in Hong Kong at the end of June.
Speaking about the joint venture with GLP however Graeme Eadie, senior vice-president for real estate investments at CPPIB, said: “The Japan Development Fund provides CPPIB an entry into Japan's logistics facilities market and represents our first direct real estate investment in this country.”
“The growing demand in Japan for modern third party logistics facilities provides an attractive investment opportunity for us. We look forward to partnering alongside GLP who has a proven track record and is aligned with our strategy to develop and hold these assets over the long term.”
CPPIB invests funds not needed by the C$153.2 billion (€109.8 billion; $157 billion) state pension Canada Pension Plan to pay current benefits on behalf of 17 million Canadian contributors and beneficiaries.