CapitaLand to invest in Japan logistics asset and sell two Greater Tokyo malls

A rendering of CapitaLand's planned second logistics property in Japan. Credit: CapitaLandA rendering of CapitaLand's planned second logistics property in Japan. Credit: CapitaLand

CapitaLand will invest around 7.5 billion yen (S$90.8 million) to acquire a site and develop a logistics facility in Osaka, Japan, and it has divested two Greater Tokyo area retail malls for more than 42 billion yen, or around S$520 million, the property developer said in a filing to SGX Thursday.

The logistics property, which will be CapitaLand’s second in Japan, was acquired from Mitsui & Co. under an ongoing tieup with Mitsui & Co. Real Estate to develop and operate logistics properties in the country, the statement said. The development is expected to be completed in the third quarter of 2023, CapitaLand said.

Gerald Yong, CEO of CapitaLand International, pointed to Mitsui RE’s strong track record in logistics property development and leasing for deepening the relationship.

“We are confident that the asset will meet the strong demand and we see further potential to expand CapitaLand’s logistics portfolio in the country. The logistics sector is the fastest growing real estate sector in Japan, fuelled by the e-commerce market that is expected to rise at a
compound annual growth rate of 7.5 percent to reach 28.6 trillion yen in 2024,” Yong said in the statement.

He noted vacancy rates in Greater Osaka logistics properties were projected at less than 2 percent in 2022.

CapitaLand said its first Japan logistics asset, located in Greater Tokyo, was a joint venture set in November 2020 with Mitsui RE; that development will be completed in the fourth quarter of 2022, the company said.

Divested last two Japan malls

The two malls, Olinas Mall and Seiyu & Sundrug Higashimatsuyama, were sold to unrelated third parties for a price above their total valuation and are expected to bring a net gain of around 9 billion yen (S$109 million), CapitaLand said, adding it no longer holds any malls in Japan.

“CapitaLand has successfully exited from retail in Japan, which is non-core to the group, and will continue our strategic pivot by reinvesting the proceeds from the divestment of our mature malls into new economy assets like logistics that have significant growth opportunities,” Jason Leow, president for Singapore and international at CapitaLand Group, said in the statement.

Leow added CapitaLand’s total logistics assets under management (AUM), including the two Japan properties, is around S$3.9 billion.