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GLP, CPPIB form ¥100bn Japan logistics JV

The Singapore-based logistics firm and the Canadian pension firm have launched their second Japan-focused logistics partnership after investing more than 90 percent of the capital raised via the first venture.

Global Logistic Properties, the Singapore-based logistics real estate developer and investment manager, has launched its second Japanese logistics joint venture partnership with Canada Pension Plan Investment Board (CPPIB). The total equity committed by the two partners in the 50:50 JV is ¥100 billion (€790 million; $880 million).

The firm is targeting to increase the total equity investment in GLP Japan Development Venture II to $2 billion over a period of three years, GLP said in a statement. Ralf Wessel, head of fund management at GLP, told PERE that including leverage on a 60 percent loan to value basis, the total investment capacity of the venture currently will also be approximately $2 billion.

GLP JDV II will be seeded with a large-scale logistics park in Greater Tokyo providing 3.4 million square feet of total gross floor area. GLP Nagareyama will be GLP’s largest development project in the country and will be constructed in phases at a total investment cost of ¥59 billion.

The partnership is a follow-on venture to GLP Japan Development Venture I which has now reached 92 percent of its investment capacity, with $2.4 billion worth of projects in various stages of development. GLP and CPPIB have jointly committed ¥130 billion in total through a total of three equity upsizes to GLP JDV I that was launched in September 2011.

“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,” said Ming Mei, chief executive officer of GLP on the new JV. “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 investment strategy of GLP JDV II will allow the venture to sell assets to GLP’s Japan real estate investment trust (REIT), a move that GLP says would help in generating attractive returns.

CPPIB has long been an active investor in GLP’s logistics development projects across Japan, but also China and Brazil. In October 2014, the Canadian investor announced a fresh equity upsize of ¥15 billion to Japan JDV I, taking its total commitment to the partnership to ¥65 billion.

Jimmy Phua, managing director and head of real estate investments, Asia, for CPPIB, said the “strong fundamentals in the Japanese logistics market as well as GLP’s attractive development pipeline made GLP JDV II a compelling investment opportunity for a long-term investor like CPPIB.”

M3 Capital Partners was the financial advisor to GLP in the formation of the joint venture.

GLP has $8.9 billion in total assets under management in Japan, of which around $6 billion has been invested.