The robust demand for logistics real estate was demonstrated by the Singapore sovereign wealth fund GIC's announcement on Friday (Apr. 28) that it would purchase a portfolio of six logistics assets in Japan from Blackstone Inc. for more than US$800 million.
According to data gathered by Refinitiv, the transaction, which consists of 4 million square feet of warehouses spread out across Japan, is the biggest real estate acquisition in Japan this year in terms of value.
"It is a good addition to our Japan portfolio as we continue to focus in tailwind sectors such as hospitality and logistics," Goh Chin Kiong, deputy chief investment officer for GIC's real estate business, said in a statement.
As the country's interest rates continue to be low, GIC, a foreign investor in Japan for more than three decades, has recently increased its deal activity. It acquired hotel and leisure businesses from Seibu Holdings, a Japanese railway and hotel group, last year.
While rising borrowing costs have put pressure on the real estate market globally, the logistics industry has largely escaped harm.
"Blackstone has reshuffled its (real estate) portfolio over the decade," shifting its focus to logistics, data centres and hotels away from traditional assets like offices, said Daisuke Kitta, the head of Blackstone's real estate business in Japan.
"We've secured solid returns through the latest deal despite the real estate market downturn. It shows that it's important to be selective about assets," he added.
The logistics assets that Blackstone acquired from Daiwa House Industry Co. around two years ago are being sold. Under its management, the assets' net operating income, a crucial indicator of profitability, has increased by 35%, according to Blackstone.
The US company announced this month that it had raised $30.4 billion for its most recent international real estate fund as it seeks to expand into the sector. It is now managing $332 billion in investor capital.