M&G Real Estate Asia and the ESR Group have announced a long-term partnership on behalf of M&G Asia Property Fund, to develop a portfolio of logistics properties across Tokyo, Osaka and Nagoya.
The partnership, for which M&G intends to deploy up to US$350 million in equity, is expected to expand the ESR-managed and M&G-invested logistics portfolio to over US$1 billion in gross asset value.
As the inaugural project under this partnership, M&G will hold a majority interest in the development of a state-of-the-art logistics facility in Nagoya, Nagoya Minami 2 Distribution Centre, on behalf of its M&G Asia Property Fund, with ESR managing the facility upon completion. The project will commence construction in November 2022, with completion targeted for October 2023.
This project is strategically located in Minato-ku, an established industrial area approximately nine kilometres away from Nagoya’s central business district. Minato-ku is an urban ‘infill’ location targeted at tenants who provide ‘speed-to-market’ distribution into central Nagoya.
The 24,545 sqm (7,419 tsubo) site allows for the development of a 4-storey, multi-tenanted facility with a total net rentable area of 44,897 sqm (13,581 tsubo). It enjoys convenient accessibility to major roads including the Funami Interchange, Nagoya Expressway and Isewangan Expressway, and is walking distance to trains and established residential areas.
This latest project builds on M&G’s expanding relationship with ESR, where both firms have previously teamed up on two other logistics centres in Ichikawa and Nagoya. The two centres, which both hold CASBEE A ratings, adopt an environmentally friendly approach and human centric concept from design to execution, with built in solar energy production and energy efficient equipment as well as childcare facilities and staff lounges.
Commenting on the partnership, Stuart Gibson, Co-founder and Co-CEO at ESR, said: “We are excited to solidify our partnership with this third transaction and the first development in Japan with M&G Real Estate Asia, an experienced global investor in the sector.”
Jing Dong (JD) Lai, CEO & CIO, Asia at M&G Real Estate, said: “The logistics sector is an important part of Japan’s economy and demand for state-of the art facilities remains robust. M&G Real Estate has been active in this space for many years and we are delighted to formalise our long standing relationship with ESR, an eminent logistics expert, leveraging on their capabilities to capitalise on strong market demand for high-quality assets in this space.”
Greater Nagoya has the highest output of manufactured goods in Japan, underpinning a greater demand for logistics properties, according to ESR.
With only 4.9% of the buildings less than 10 years old and constrained supply in the medium to long term, the demand for high quality modern logistics facilities is anticipated to remain high, the company said.