GLOBAL - Singapore's Global Logistic Properties, a unit of the Government of Singapore Investment Corporation, and Canada Pension Plan (CPP) have formed a joint venture to invest $500m (€352m) over the next three years to build cargo and warehouses in Japan.

The Japan Development Fund will build "multi-tenant, build-to-suit facilities" in Osaka and Japan. Each side will invest $250m over the next three years.

This is the first joint venture between CPP and Singapore-listed Global Logistics. It is also CPP's first direct real estate investment in Japan.

The deal comes on the heels of its June acquisition of a 50% stake in Hong Kong Interlink, an industrial facility under progress near the Hong Kong International Airport for CAD285m (€204m).

The new fund is already eyeing a site in Tokyo as its first potential development. The new fund will be open-ended, with 50% loan-to-value ratio once it is stabilised.

According to a CPP Investment Board (CPPIB) spokesperson, which invests the assets of Canada Pension Plan, the move into Japan reflects a particular focus on industrial real estate.

While the fund generally prefers "transparent and developed markets", the fund is investing more in emerging markets due to "long-term growth prospects and need for modern real estate development".

Graeme Eadie, senior vice-president of real estate investments at CPPIB, said the joint venture recognised the growing demand for modern cargo and warehouse facilities in Japan.

"The growing demand in Japan for modern third-party logistics facilities provides an attractive investment opportunity for us," he said.

Jeffrey Schwartz, deputy chairman at Global Logistics, said: "Developing logistics facilities in Japan is an attractive use of capital, and the joint venture will enable to capitalise on opportunities and manage risks."

Formerly known as ProLogis, GLP acquired a 53% stake in China's Airport City Development Co - which is the sole developer of airside cargo handling and bonded warehouse logistic facilities for Beijing Capital International Airport - for $375m earlier this year.

Asia's largest provider of cargo and warehouse facilities, Global Logistics, which was listed on the Singapore Stock Exchange last year, owns, manages and leases 337 completed properties in 127 logistics parks spread across 27 major cities in China and Japan.

As of 30 June 2011, CPP has total investments in Asia ex Australia of around CAD11.3bn or roughly 7% of its total CAD153.2bn.

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