AXA, sovereign fund buy US$1bn Japanese logistics portfolio

AXA Investment Managers – Real Assets, the property arm of the French insurer, and an unnamed sovereign wealth fund have purchased a US$1bn logistics portfolio in Japan from logistics specialist ESR.

The deal sees AXA IM Real Assets, ESR and the wealth fund team up in a joint venture that will target further investments across Japan’s gateway cities, according to a statement from ESR.

The acquired portfolio features six prime assets in Tokyo and Osaka, with an average age of three years or less.

The investment comes in the midst of a booming logistics sector, which has been expanding at 8% a year in Japan.

At the same time, the country faces a shortage of modern logistics space, where new stock accounts for less than 10% of total logistics space in Japan.

“Internet retailing continues to grow in Japan but the level of penetration is low compared to many other global markets, underpinning our confidence that building a portfolio of well-located modern logistics assets will allow us to deliver secure income returns over the long term for our clients,” said Laurent Jacquemin, head of Asia Pacific at AXA IM – Real Assets.

The JV will focus on providing core returns through ESR’s in-house pipeline of self-developed properties, as well as acquisitions of stabilised assets from outside parties.

While the JV will initially use the existing capital for future investments, it may also raise additional capital from new investors over time.

“The perpetual investment vehicle has the potential to grow several-fold in the coming years, with a strong pipeline of stabilised assets while offering a higher-yielding alternative to J-REITs,” according to Josh Daitch, senior managing director, investment and capital at ESR, and ESR head of private capital Pierre-Alexandre Humblot.

The partnership comes just weeks after warehouse investor and developer GLP launched a US$5.6bn Japanese logistics real estate fund with the backing of Canada Pension Plan Investment Board and other investors.

Headquartered in Hong Kong, ESR’s platform spans the People’s Republic of China, Japan, Singapore, South Korea, Australia and India.

It has more than US$14bn of assets under management.

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