ESR Cayman doubles ESR Japan Logistics Fund III to JPY150B

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Hong Kong-listed ESR Cayman has doubled the capital commitment to the ESR Japan Logistics Fund III (RJLF3) to 150 billion yen (US$1.35 billion) after another 75 billion yen was added, the Asia-Pacific-focused logistics real estate company said Tuesday.

RJLF3, a joint venture with Dutch pension fund APG, now has a total investment capacity of as much as 470 billion yen, or around US$4.2 billion), ESR Cayman said in a press release.

The fund was set up in 2019 to focus on developing large-scale logistics facilities in Japan’s major metropolitan areas, the release said. So far, it has invested 65 billion yen in five projects.

“The supply of modern institutional quality logistics assets in Japan remains low, while Japanese household online shopping usage grew 19 percent in 2020 and is up 11 percent year-to-date,” Josh Daitch, ESR group head of fund management and capital, said in the statement.

“This imbalance is common across the APAC region which is why we are seeing increasing capital targeting the sector in APAC. The upsize of RJLF3 reflects the collective confidence of our institutional investment partners in ESR’s ability to continue capitalise on this robust secular opportunity,” Daitch said.

Graeme Torre, head of real estate for APG Asset Management Asia, added that developing logistics assets in Asia Pacific, particularly in the major economies, offers attractive risk-adjusted returns for long-term investors such as APG.

Other major property investors have also been targeting Japan’s logistics sector.

Earlier this month, CapitaLand said it would invest around 7.5 billion yen (S$90.8 million) to acquire a site and develop a logistics facility in Osaka, Japan. 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.

CapitaLand noted that Japan’s e-commerce market is expected to rise at a compound annual growth rate of 7.5 percent to reach 28.6 trillion yen in 2024.

In Japan, ESR manages US$7.9 billion in logistics facilities and owns a development pipeline in Greater Tokyo and Greater Osaka, the release said.