After a bidding process of almost three months, LaSalle Investment Management has selected a buyer for a portfolio of eight logistics assets held by its second Japanese logistics real estate fund.
PERE understands the firm has picked a consortium of Japanese institutions as its preferred bidder for the portfolio, held in its Japan Logistics Fund (JLF) II. The consortium is expected to pay almost $900 million for the portfolio. It was expected to trade at just below a 5.5 percent yield.
The sale marks the Chicago-based firm’s second large scale logistics real estate exit in Japan, following the offloading of a $1.6 billion logistics portfolio at the end of 2011 to Singapore-based logistics real estate developer and fund management firm Global Logistic Properties and Chinese sovereign wealth fund China Investment Corporation.
LaSalle closed JLF II on ¥90 billion (€694 million; $908 million) with commitments from 27 investors in late 2007.
In all, the eight properties comprise a total of 5.7 million square feet, all in Tokyo and Osaka. Seven of the properties are virtually fully leased and one property finished development three months ago and is about 84 percent leased. The 2013 net operating income of all eight properties is forecast to be JPY 4.6 billion, according to marketing materials.
LaSalle accumulated the portfolio via a mixture of speculative developments for multiple occupation, bespoke developments for single occupation and already completed and leased properties.
The sale generated interest domestically and internationally. The firm narrowed an original 40 expressions of interest down to between 15 and 18 qualified bidders, and down further to around 8 first-round bidders. Amongst those bidders was thought to be private equity real estate firms The Blackstone Group, Invesco Real Estate, and Fortress Investment Group.
The bidders were narrowed down to two in just the last week: one consortium of major Japanese financial institutions, and one of the private equity real estate firms. LaSalle finally decided on the domestic buyer over the weekend, PERE understands.
The sale comes at a time when Japan’s J-REIT market has received plenty of domestic institutional attention. It is thought the yield on offer through the purchase of LaSalle’s logistics portfolio was comparatively more attractive to the consortium than those generally available from investing in J-REITs currently.
LaSalle’s bidding process was more transparent than for typical Japan real estate property sales. Rather than using brokers, the two bidding rounds were done by sealed envelope bids. Such a process could become more common as the Japan market gets more active.