The Redwood Group, the Singapore-based logistics fund manager, has invested ¥20 billion (€154.23 million; $167.75 million) in acquiring two sites for developing logistics facilities in Japan.
The combined value of the two facilities after completion is expected to be over ¥120 billion, the company said in a statement.
Part of the investment has been made via the firm’s Redwood Japan Logistics Fund and the remaining is in the form of leverage raised from Diamond Realty Management, Sumitomo Mitsui Trust and Shinsei Bank, who are primary lenders in the deal. PERE understands that the leverage to equity ratio is around 60 percent to 70 percent.
“We are thrilled to announce these developments in Kansai of significant scale. Each is carefully located and designed to surface with efficiency, safety and environmental sensitivity and logistic needs of our domestic and international clients,” Charles de Portes, president of the firm, and Stuart Gibson, the chief executive officer, said in a joint statement.
The two distribution centers, called Redwood Nanko DC and Higashi Osaka DC, are located in the greater Osaka area. The Redwood Nanko DC, spread over a gross floor area of 2,690,977 square feet, is located within close distance to the central business district in Osaka as well as the airport. The project has been pegged to be one of the largest logistics real estate developments in Japan, according to the firm. The other facility, Redwood Higashi Osaka DC, will be developed into a 5-storied warehouse with a total gross floor area of 1,614,586 square feet.
Hideaki Matsunami, the firm’s managing director for Japan, and Atsushi Maeda, business development director, further added that given the shortage of supply for logistics properties in the region, the firm is being actively approached by prospective tenants for the facilities.
“Underlining the strong demand in the region, the vacancy rate for industrial and logistics properties in the greater Osaka region is at an all-time low of 0.4 percent compared to Greater Tokyo of 3.8 percent, making it difficult for firms to find enough quality space to meet their needs,” the two added.
Construction for both projects will commence in October this year and the target completion is by end of 2016. PERE understands that around ¥350,000 per tsubo (Japanese unit of measurement equivalent to 35.62 square feet) will be spent on construction costs. The expected exit cap rate is 4.8 percent.
In addition, the firm also announced the commencement of construction for another development project in greater Tokyo. The Chibakita DC project consist of the development of a 4-storey build-to-suit facility on a gross floor area of 397,661 square feet. The project is expected to be completed by March next year.
The Redwood Group was launched in 2006 by Charles de Portes and Stuart Gibson, and is staffed by teams in Singapore, Japan and China. Its Japan Logistics Fund was launched in 2011, with an initial target of $500 million. It is understood to have closed at $360 million, along with also doing some of co-investments and sidecar agreements with the investors in the fund.