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ESR corrals $750m for Japan fund – Exclusive

The logistics developer-cum-fund manager is also plotting the launch of two new logistics real estate funds in the region by the end of the year

e-Shang Redwood (ESR) has inched closer to the final fundraising target for its second Japan-focused logistics real estate fund by raising $750 million in equity commitments from investors.

PERE has learnt that a final close for the Redwood Japan Logistics Fund (RJLF II) is expected to be held at the end of the year once a couple of big-ticket investors have committed capital.

RJLF II was launched in early 2015 with an initial $500 million fundraising target. The intended fund size was later increased to $1 billion following the merger of The Redwood Group and e-Shang to create ESR in January this year.

The firm declined to comment on fundraising.

Meanwhile the firm has already started deploying the fund corpus into warehouse development projects across Japan. Earlier this week it acquired two land parcels, with a combined area of 1.5 million square feet in the Tokyo bay area, to develop three eight-story warehouses.

According to Ben Duncan, North Asia president of real estate consultancy CBRE, “the project is one of the largest master planned distribution parks in the Tokyo area.”

Stuart Gibson, co-founder of ESR, and head of its operations in Japan further added: “The Bay Area in Tokyo has always been the highest demand location for largescale modern logistics operators. Currently, facilities in this submarket are running at full occupancy which confirms the strong fundamentals in the Japanese logistics market.”

Following the merger, ESR has been actively expanding its exposure in China, Japan and other target logistics markets in the region by increasing its development pipeline and bringing new funds into the market. According to PERE sources, the firm is plotting the launch of two more funds before the year-end. One will be a pan-Asia core open-ended real estate vehicle – ESR’s maiden fund for investing across Asia – and the other will be focused specifically on logistics development in China. The fundraising target for the vehicles is not known yet.

Last week, the Chinese insurer Ping An’s real estate investment platform also announced an investment of $300 million in a programmatic joint venture with ESR for logistics deals in Japan.