CPPIB commits $700m to record-breaking Japan fund – Exclusive

The Canadian pension plan’s equity in GLP Japan Development Partners III will be primarily allocated to co-investment opportunities.

Canada Pension Plan Investment Board has made one of its largest capital outlays in Japanese real estate to date with its latest commitment to Singapore-based logistics provider GLP, PERE has learned.

CPPIB declined to comment, but PERE understands that the Canadian pension plan committed approximately $696 million to GLP Japan Development Partners III, or nearly 32 percent, of the total $2.2 billion in equity raised for the fund. Of that amount, just over $100 million will be in the main fund, while the remainder will be allocated to co-investment opportunities.

JDP III is the largest Japan-focused industrial real estate fund raised to date. The fund is nearly double the size of the second-largest Japanese logistics capital raises, ESR‘s Redwood Japan Logistic Fund 2, which closed earlier this year and raised $1.2 billion between the main fund and related co-investment vehicles; and GLP Japan Development Venture I. Redwood, which initially raised $500 million in 2011 but with follow-on commitments ultimately amassed a total of $1.2 billion, according to PERE data.

JDP III marks the first commingled fundraise for GLP’s Japan-focused development strategy, with CPPIB as the vehicle’s cornerstone and largest investor and sovereign and pension funds as additional limited partners.

The predecessor funds in the series, JDV I and II, the latter of which collected a total of $900 million in 2016, were structured as 50-50 joint ventures between GLP and CPPIB. PERE understands the change from a single-investor JV to a commingled fund structure resulted from increased investor interest in the firm’s Japan logistics development strategy as well as the strong track record of the prior vehicles in the series, both of which are now fully invested. GLP declined to comment on the performance of the two funds, but publicly announced that exits from JDV I have included the April 2015 sale of GLP Kobe-Nishi at a net levered property internal rate of return of 128 percent.

“The establishment of the largest ever Japan-focused logistics private real estate fund is a testament to the strength of our team on the ground and the solid track record in acquiring attractive sites in Japan,” said Ming Mei, co-founder and chief executive of GLP.

Added Jimmy Phua, head of Asia real estate at CPPIB: “This new fund builds on the success of our earlier programs and underscores our long-term commitment to investing in Japan.”

JDP III is expected to reach $5.6 billion in assets under management when fully invested. The vehicle will be seeded with GLP Sagamihara, a $1.2 billion logistics development project in the greater Tokyo area. The project will be developed in phases and ultimately encompass some 7 million square feet of total gross floor area upon completion.

With JDP III, GLP’s Japan business will manage more than $18 billion in AUM across its three development funds; its value-add fund GLP Japan Income Partners I; and its core-focused GLP J-REIT.

In addition to Japan, CPPIB also has invested with GLP in the US, India and Brazil. These include commitments to GLP US Income Partners I in 2015; GLP Brazil Development Partners I in 2012 and GLP Brazil Income Partners I and II in 2012 and 2014, respectively.