The Redwood Group, the Singapore-based logistics fund manager, has come to market with its second Japan-focused logistics real estate fund with a $500 million capital raising target.
Redwood Japan Logistics Fund (RJLF) II has been structured as a value-add fund to be invested in warehouse development projects across target markets in Japan. It has almost double the target size of the firm’s flagship Japan vehicle that raised $275 million in 2014 and is now fully invested.
The decision to increase the fund size is understood to be in response to the growing appeal of the Japanese logistics sector to global institutional investors. According to a recent white paper published by JLL, the demand for logistics real estate is expected to touch 4.4 million tsubo (156.6 million square feet) in 2020, attributable to a rise in online retail and a doubling in size of the e-commerce industry by then. Furthermore, given the current supply shortfall in many areas including the Greater Tokyo market, many developers and landlords are expected to be pushed to develop higher-grade assets, the report estimated.
Redwood’s latest fund would be partially seeded with the firm’s existing pipeline of development projects in Tokyo, Nagoya and Osaka, estimated to have a combined development cost of at least $1 billion.
The firm has also structured RJLF II differently than its predecessor. RJLF was launched with a develop-to-core strategy and a longer maturity period, while the new vehicle, which Redwood started marketing to investors in May, will have an intermediate term of five years. This has been done to insulate investors from any long-term macro changes in Japan’s economic health.
No hard commitments have been secured yet but the firm is believed to be in negotiations with prospective limited partners at a term-sheet level. A first closing is expected to be held within the fourth quarter of this year.