LaSalle to sell second mega logistics portfolio in Japan

The Chicago-based real estate investment management firm is expecting bids of around $1bn for eight assets in Tokyo and Osaka held by its second logistics fund, LaSalle Japan Logistics Fund II.

Following the offloading of a large logistics property portfolio in Japan last year, LaSalle Investment Management last week brought a second portfolio to the market, PERE has learned.

The Asia platform of the Chicago-based real estate investment management firm is aiming to sell eight logistics properties in the Tokyo and Osaka areas from its second logistics fund for approximately ¥95 billion (€763.3 billion; $1.01 billion). Parent company Jones Lang LaSalle is handling the sale.

According to marketing particulars circulated to prospective buyers, the portfolio comprises approximately 5.7 million square feet of gross lettable floor area almost 100 percent of which is leased to both domestic and international occupiers for an average of 5.8 years. Among the occupiers is Nippon Express, Japan’s largest moving company.

The net operating income of the portfolio is ¥4.6 billion and it is understood a sale could reflect a yield of between 5 percent and 5.5 percent.

LaSalle is selling the properties on behalf of its second Japanese logistics fund, LaSalle Japan Logistics Fund II, which was launched in 2007 and closed on ¥90 billion with commitments from 27 investors. LaSalle accumulated the portfolio via a mixture of speculative developments for multiple occupation, bespoke developments for single occupation and already completed and leased properties.

Bids are expected from a mix of large institutional investors and domestic buyers. In recent years logistics real estate investment has become more popular with Japanese investors, both institutional and retail. Japan’s capital markets have been particularly enthused of late, with sales of three large logistics portfolios into J-REITs within the last year by Daiwa House and Global Logistic Properties and this year by ProLogis.

“There is definitely structural change in the industry. It has become less fragmented and more organised and we are seeing more and more corporates outsourcing their logistics to third parties,” said one PERE source. “The supply-demand dynamic is favourable and the yields are higher than some of the more traditional asses classes like offices and retail,” he added.

A sale by LaSalle would follow the offloading of a $1.6 billion logistics portfolio at the end of 2011 for its first logistics fund which was launched in 2004. That portfolio, comprising 15 properties, was understood to have attracted eight initial bids before a joint venture between Singapore-listed Global Logistic Properties and China Investment Corporation prevailed with a winning bid. Part of that portfolio was later sold on to the multi-manager business of CBRE Global Investors.

Yasuo Nakashima, chief executive officer for LaSalle in Japan described that sale as enabling the firm to get closer “to round-tripping one of the region’s first warehouse investment vehicles for institutional investors,” adding it had generated “such strong returns” for the fund’s investors.

Following the sale, LaSalle was believed to have started to market a third Japanese logistics fund.