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Redwood commits to $104m Japan development

The logistics-focused firm has closed its largest deal to date as a seed asset for its Japan logistics fund, and has deployed almost all the current committed capital of the $500 million fund.

The Redwood Group, the Singapore-based real estate investment firm specializing in the logistics and transportation sectors of Asia, has acquired land for the development of a distribution center in the Japanese city of Yokohama south of Tokyo.
 
Stuart Gibson, chief executive of Redwood, told PERE that the investment is expected to total $104 million including development and construction costs, making it Redwood’s largest deal to date in the region, even including the firm’s projects in China. The leverage for this deal is expected to be approximately 60 percent, he added.
 
Redwood closed this deal for its Redwood Japan Logistics Fund (RJLF) as a seed asset, just after holding a $187 million first close for the vehicle. Redwood declined to comment on fundraising, but with this investment, Redwood is understood to have committed almost all of its first close capital. The firm is understood to be targeting $500 million for the fund overall, and is expected to hold its final close within half a year.
 
The Yokohama site totals 2.6 hectares, and Redwood is planning to build a 5-story, 538,000 square feet multi-tenant facility incorporating both environmental and seismic technology, according to a Redwood statement. The facility will be called Redwood Namamugi warehouse, and the firm is expected to commence construction in May 2014 with targeted completion in Q2 2015.
 
As a logistics hub, Yokohama already houses a number of multinational corporations, manufacturers and third-party logistics providers. When completed, Namamugi would have convenient access to the city’s highways, its largest pier and one of Japan’s largest airports, Haneda.
 
“Despite a high level of demand in the area, the supply of modern facilities in the submarket is scarce, with record low vacancy rates,”Gibson said in the statement. “The site and its planned high visibility and high specification distribution center will be well-positioned to service long-term demand in the area.”
 
Redwood is also raising a China-focused club fund, targeting RMB 2.5 billion (€302 million; $408 million) for which it held a €95 million first close last July. A few months ago, Redwood also received an investment from Equity International (EI), which gives the Chicago-based emerging markets investment firm a significant minority stake.