Morgan Stanley AIP makes Japan real estate debut

The real estate multi-manager arm of the New York-based investment bank has made its first investment in Japan with another co-investment alongside logistics manager Redwood.

Morgan Stanley Alternative Investment Partners (MS AIP) has made its first foray into the Japanese real estate market with a 50:50 co-investment alongside one of its existing partners in China, Asia-focused logistics fund manager The Redwood Group.

MS AIP has come on board Redwood’s $105 million deal for a development site in Sakura, close to Tokyo’s Narita International Airport, for which Redwood has syndicated 50 percent of the equity in the project to its new partner, PERE can reveal. Redwood closed on the deal with its own equity in December and has only just now brought on MS AIP as a co-investor.

This is Redwood’s second co-investment deal with MS AIP, the first being a 388,000-square-foot facility for Daimler Northeast Asia Parts Trading and Services in the southern Chinese city of Guangzhou announced in January, which had a total deal size between $50 million and $100 million.

Like the China deal, Redwood will act as both the operating partner and developer for the 915,000-square-foot multi-tenant facility in Sakura. The planned development is located a short distance from the Sakura interchange of the Tokyo-Narita expressway, giving quick access to both the airport and Tokyo’s central business district.

Stuart Gibson, chief executive of Redwood, told PERE earlier that the warehouse already has 20 percent of its leasing commitments from several Japanese companies. MS AIP added that Redwood currently is in leasing negotiations with third-party logistics, end user and e-commerce tenants. Construction is expected to commence shortly, with completion targeted for the second quarter of 2015. This deal with MS AIP is Redwood’s fifth investment in Japan in the past six months.

“Our investment strategy is to align with and co-invest alongside what we believe to be best-in-class real estate fund managers around the world with a specialist expertise in their local markets,” said David Boyle, chief investment officer and co-head of MS AIP Real Estate. “Redwood’s focus on high-quality distribution buildings located in the largest and most dynamic cities of Asia fits well with our investment strategy.”

Within Asia, MS AIP has so far primarily invested in greater China and now Japan for real estate, though the firm declined to comment on its future plans. However, it is understood that this Redwood co-investment is not expected to be a one-off transaction for the firm in Japan, and MS AIP could close another deal in the market in the next 12 months.