Prologis forms $1 bln Japanese property fund

GIC Real Estate Invests $300 Million in Equity;
ProLogis To Retain 20% Ownership of Fund and Manage Properties

ProLogis, a leading global provider of distribution facilities and services, announced today that it has formed a joint venture for its first Japanese property fund (the Fund) together with the GIC Real Estate Pte Ltd, the real estate investment company of the Government of Singapore Investment Corporation (GIC).

The Fund will own newly developed and acquired properties throughout the company’s targeted distribution markets across Japan with a focus on Tokyo, Osaka and Nagoya.

GIC RE has committed a total of $300 million ($37 billion yen) in equity and will have an 80% stake in the Fund. The Fund’s total capacity upon full funding of the committed capital, including GIC RE’s equity, ProLogis’ future equity contributions and secured debt that the Fund intends to put in place, will be approximately $1 billion (124 billion Yen).

K. Dane Brooksher, chairman and chief executive officer of ProLogis, said, “The formation of this Fund will enable ProLogis to capture the significant opportunities that exist to serve customers in Japan. Demand for new, modern distribution space continues to grow as companies reconfigure their existing networks for greater efficiencies. During the three years that ProLogis has been evaluating the Japanese market, we have established alliances with key brokers, contractors and government land departments in target markets and with the formation of this Fund, we now have the capital in place to fund our expansion.”

Dr. Seek Ngee Huat, president of GIC RE, said, “The ProLogis Japanese Properties Fund is a good fit with our investment objectives. GIC RE invests globally in diverse sectors. This investment in the Fund provides us with a platform for investing in a specialized sector through an alliance with the premier provider of distribution facilities globally, and contributes solid returns to our investment in Asia.”

Jeffrey H. Schwartz, president and chief operating officer for ProLogis Asia, said, “GIC manages in excess of $100 billion and through GIC RE, has over 120 investments in 25 countries. They are a proven ally, GIC RE having been one of the initial investors in the ProLogis European Properties Fund. Our alliance with GIC RE is consistent with our capital diversification strategy. In addition to contributing newly developed facilities in Japan, we also plan to grow the Fund through selective, opportunistic acquisitions. We believe that the acquisition environment in Japan may become more attractive as new legislation requires Japanese corporations to mark their real estate holdings to market and adopt international and generally accepted accounting standards. This could prompt companies to transfer real estate from their books and to lease rather than own properties.”

The company stated that it intends to contribute its first development project in Japan, a 196,000 square foot build-to-suit distribution facility for DHL International in Tokyo to the Fund this fall.

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(source: Prologis)

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