Japan’s largest logistics investment deal in 2023 revealed
It was a US$800m transaction closed in April.
According to preliminary data aggregated by MSCI cited in a Savills report, investment activity in Japan has been strong in 1H/2023, with total investments around 26% greater than those seen in 1H/2022. Over the same period, investment volumes in the logistics sector nearly tripled due to a number of big-ticket transactions.
“Furthermore, transaction data is preliminary and investment volumes will likely increase as more transactions are announced throughout the rest of the year,” the report added.
Here’s more from Savills:
International investors have been notably active in the logistics market in the first half of 2023. For instance, the largest transaction of 2023 was by GIC, which acquired six facilities with an aggregate GFA of around 372,000 sq m from Blackstone for US$800 million or approximately JPY107.0 billion in April 2023, marking one of the most significant logistics transactions ever reported in Japan.
Meanwhile, Mapletree Logistics Trust bought six logistics facilities that were all constructed within the past four years from CBRE Investment Management for US$500 million or JPY66.0 billion. Another notable transaction was by Mapletree Industrial Trust, which acquired a 7F data centre with a GFA of 12,600 sq m in Osaka from SPC Suma TMK for JPY52.0 billion in July 2023. The logistics market is the most sought after, especially by international investors who are seeking a larger exposure to Japan, excluding the office market.
J-REITs also contributed a significant proportion of logistics transactions in the first half of 2023. For instance, GLP J-REIT acquired four logistics facilities in Kanagawa, Okinawa, Okayama and Fukuoka for JPY58.2 billion, the largest deal being the acquisition of a 30% quasi co-ownership stake in the GLP Alfalink Sagamihara 5 in Kanagawa for JPY19.4 billion.
Additionally, Nippon Prologis REIT acquired the 143,800 sq m Prologis Soka logistics facility in Saitama for JPY51.4 billion, while LaSalle Logiport REIT acquired three logistics facilities in Kyoto and Aichi for an aggregate total of JPY23.1 billion. Elsewhere, in May 2023, Kenedix acquired the ST Tokorozawa Logistics Center in Saitama, appraised at JPY13.0 billion, with part of the deal financed via a real estate securitised token offering (STO).
Despite concerns regarding recent interest rate increments and sharpened pricing, the demand for logistics facilities in 2023 remains robust, as the large transaction volume in 2023 indicates. Indeed, logistics assets in Japan will likely remain sought after, particularly among overseas investors, due to the large growth forecast for Japan’s e-commerce industry.
That said, the 32nd bi-annual market sentiment survey conducted by Ichigo Real Estate Service indicates that a majority of respondents have a somewhat neutral outlook, citing concerns regarding rising interest rates, labour shortages, and inflation, which suggests a dampened outlook of further rental growth.