ESR raises US$630m for Japanese logistics fund

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Hong Kong-based logistics real estate platform ESR has raised JPY 70bn (US$630m) in the closing of its ESR Japan Logistics Fund 3 to fund its development pipeline in Greater Tokyo, Osaka and Nagoya.

ESR, which has US$16bn of assets under management, raised the equity commitments from two investors, initially providing the fund with up to JPY 200bn of investment firepower.

The investors have commitment expansion options that would increase total investment capacity to as much as JPY 530bn (US$4.8bn) over time, ESR announced.

The fund will develop large-scale, state-of-the-art logistics facilities in Japan’s largest metropolitan areas.

ESR has some sizeable projects in the pipeline, having just acquired a prime parcel of land in the city of Toda in April.

The firm plans to develop a four-storey, multi-tenant logistics facility worth JPY 35bn, adding to its four existing assets in the Saitama prefecture area.

ESR Toda Distribution Centre (image: ESR)

ESR also bought a plot in the Greater Tokyo area in March and announced plans to invest more than US$1bn to develop it into one of the biggest logistics parks in Japan.

The initial phase of the ESR Yokohama Distribution Centre will feature two modern, four-storey logistics warehouses totalling 393,226 sq.m. in the southern part of Yokohama, a city in the Kanagawa Prefecture — some 45km from the Tokyo CBD.

The capital raising comes after ESR sold a Japanese logistics portfolio to AXA Investment Managers – Real Assets, the property arm of the French insurer, and an unnamed sovereign wealth fund for US$1bn in January.

Other overseas investors seizing on the country’s booming logistics real estate market too, with Allianz Real Estate committing US$600m to GLP‘s logistics development funds in China and Japan earlier this month.

ESR was co-founded by its senior management team and Warburg Pincus, and has assets across the People’s Republic of China, Japan, South Korea, Singapore, Australia and India.