LaSalle Investment Management has closed its third Japan Logistics Fund at ¥40.8 billion ($431 million) at a time when the sector is seeing a rise in logistics property values on the back of an Abenomics-fuelled increase in exports.
It follows predecessors Fund II, which raised ¥90 billion in 2008, and Fund I which closed at $400 million in 2004.
While the scale of the latest vehicle is less than half the size of Fund II, LaSalle says it worked with investors to design it as a ‘club-style fund’. It enables a small group to investors – including Dutch pension manager APG – to directly co-invest alongside the vehicle into individual deals.
LaSalle acknowledges that the fundraising environment was challenging. Its parent, real estate services firm Jones Lang LaSalle, says sales in Japan of offices, logistics and retail space reached ¥1.48 trillion in the first five months of the year – up 70% from the same period in 2012.
While the increased demand suggests point to higher valuations, the yen has devalued 15% against the dollar since the start of the year. Yen devaluation, an effect of Prime Minister Shinzo Abe’s monetary stimulus measures introduced in April, is expected to boost exports, and, by extension, the logistics industry.
LaSalle IM sees opportunities in the market, given the gap between supply and demand, says Yasuo Nakashima, the firm's Japan chief executive. Modern, multi-tenanted logistics facilities in Greater Tokyo and Greater Osaka will be a focus for the new fund.
LaSalle is a pioneer in creating Japan-focused logistics funds aimed at institutional investors. It exits investments through sales to strategic buyers.
Earlier this year it was reportedly seeking bids of $1 billion for eight assets in Tokyo and Osaka held by Fund II. Similarly, most of the assets held by Fund I were sold for $1.6 billion to sovereign wealth fund China Investment Corporation and Global Logistic Properties in 2011.
Beyond Australia, LaSalle IM views Asia’s logistics markets as relatively immature and ripe for the development of modern facilities, which generate good-quality income streams.