Ivanhoé Cambridge, PAG Launch $400M Logistics Venture

The companies, which have been strategic partners for several years, are eyeing opportunities in three of Japan’s largest metro areas.
Image by tianya1223 via Pixabay.com

Ivanhoé Cambridge and PAG Real Estate have launched a new venture focused on logistics assets in Japan.

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The venture aims at both developing and acquiring “for longer-term hold high-quality core logistics facilities especially in urban and last-mile locations,” with a capacity to deploy as much as $400 million, according to the venture partners.

More specifically, the venture reportedly will take advantage of strong fundamentals and third-party logistic tenants’ demand for high-quality space in Greater Tokyo and Greater Osaka, and secondarily in Greater Nagoya. The venture has already identified a pipeline of possibilities for its $400 million investment program.

George Agethen, Ivanhoé Cambridge senior vice president for Asia-Pacific, noted in a prepared statement that the company has already invested in Singapore, Australia, China, India and Indonesia, so Japan represents a logical way to further diversify its portfolio in Asia.

The venture will be governed by an investment committee composed of Ivanhoé Cambridge, as the venture’s majority shareholder, and PAG, which will operationally manage the venture.

The two companies have had a strategic partnership since their first joint investment in 2017.

Landlords’ markets

Agethen pointed out that the target Japanese cities “are attractive as they are highly urbanized, have low vacancies and there is significant room to grow in their e-commerce penetration rates,” and the numbers bear him out.

The logistics market in Greater Tokyo is strikingly tight, with overall vacancy at 0.5 percent for large multi-tenant space, according to a third-quarter report from CBRE. Further, 80 percent of the space scheduled for completion over the next two quarters is already preleased.

Greater Osaka and Greater Nagoya are almost as short of such space, at average vacancies of 0.8 percent and 0.6 percent, respectively. Only in Greater Nagoya are average effective rents stable, rather than steadily increasing, again according to CBRE.

Unsurprisingly, Ivanhoé Cambridge has been active in multiple parts of the world recently. For example, in May the company acquired a major office development—still under way—in Val de Fontenay, Paris. The seven-story Joya, which will total 538,200 square feet, is set for completion in 2022.