M&G, ESR in Japan Logistics Development Venture

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Nagoya Minami 2 Distribution Center is the inaugural project of the partnership

M&G Real Estate has set up a long-term partnership with industrial giant ESR to develop a portfolio of logistics properties in Japan, with the UK-based fund manager set to deploy up to $350m of equity for the cause.

The partnership is expected to bring the logistics portfolio managed by ESR and invested by M&G to more than $1 billion in gross asset value, Hong Kong-listed ESR said on Tuesday. in a version.

The new vehicle will focus on the cities of Tokyo, Osaka and Nagoya, with the latter hosting the inaugural project, Nagoya Minami 2 Distribution Center. This announcement comes after M&G previously invested in two ESR logistics centers in Ichikawa and Nagoya.

“We are delighted to solidify our partnership with this third transaction and the first development in Japan with M&G Real Estate Asia, an experienced global investor in the sector,” said ESR co-founder and co-CEO Stuart Gibson.

Manufacturing Hot Spot

M&G will hold a majority stake in the Nagoya Minami 2 distribution center on behalf of its open-end M&G Asia Property Fund. The four-story project will begin construction in November, with ESR to manage the facility once completed in October 2023.

ESR’s Stuart Gibson

Located in Minato-ku, an industrial area approximately 9 kilometers (5.6 miles) from Nagoya’s central business district, the distribution center will offer a net leasable area of ​​44,897 square meters (483,267 square feet) to multiple tenants .

Greater Nagoya leads Japan in manufacturing output, ESR noted, with the urban infill project for tenants prioritizing quick access to downtown.

With over 95% of the region’s current warehouse stock being at least 10 years old and the supply of logistics properties expected to remain limited in the medium to long term, ESR and M&G are betting on continued demand for distribution facilities. modern in the region.

Countdown for early birds - George_250

“The logistics sector is an important part of the Japanese economy and demand for state-of-the-art facilities remains strong,” said M&G Real Estate’s managing director and chief investment officer for Asia, Jing Dong Lai.

Sold on sheds

In a deal announced in May last year, M&G Real Estate has acquired a 25% stake in ESR Ichikawa Distribution Center, the Hong Kong-based company’s largest operating building in the Tokyo area, for $216.6 million. M&G bought the stake in Redwood Japan Logistics Fund II, managed by ESR.

Three months later, M&G acquired a 40% stake in the ESR Yatomi distribution center for $91 million, valuing the Nagoya-area property at $227.5 million. The stake was sold by Redwood Japan Logistics Fund II and Redwood Investor Kawajima Ltd.

Richard van Denberg

Richard van den Berg of M&G Real Estate

Richard van den Berg, director of the M&G Asia Property Fund, said the new partnership with Japan reinforces M&G’s commitment to Asian logistics, one of the firm’s central investment themes.

“Increasing our allocation to Japanese logistics will allow us to further diversify our portfolio and provide our investors with a resilient income stream,” van den Berg said. “This build-to-core strategy further improves the overall build age of the portfolio.”

With £33.5 billion ($39.3 billion) in assets under management, M&G Real Estate has bolstered its local team in Japan with the promotion of Seiko Ikeda to lead the country in May. She had been Director of Acquisitions in Japan since 2018.

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