Mitsui Logistics REIT Buys Three Assets for $229M, Sells

Mitsui Fudosan Logistics Park REIT is spending JPY 35.7 billion ($229 million) to buy three industrial properties in Japan. The Tokyo-listed trust will also sell its entire 50 percent stake in the MFLP Yokohama Daikoku warehouse for JPY 11.9 billion, a filing on Thursday showed.

The manager stated these transactions are part of efforts to build a robust portfolio by replacing owned properties. The goal is to enhance medium- to long-term and overall profitability. The acquisitions, which exceed disposal proceeds by JPY 23.8 billion, will be funded with cash, sale proceeds, and loans.

All three assets being purchased were fully occupied as of July 31. They are scheduled for completion in 2025 and 2026. The older Yokohama facility slated for sale was built in 2009.

Portfolio Reshuffle Details

The trust is acquiring three modern properties while divesting an older asset. The purchase prices and key specifications for the new assets are detailed below.

The largest acquisition is the four-storey MFLP Ichinomiya facility in Aichi. It is positioned to serve Nagoya and distribution routes between Tokyo and Osaka.

In Kanagawa, the MFIP Ebina & Forest property is a four-storey facility with three tenants. Roughly half of the building was designed for offices, research facilities, and laboratories alongside logistics functions. The manager highlighted its proximity to Ebina station and surrounding amenities as advantages for recruiting researchers and staff.

The smallest purchase is the two-storey On-L Kyokushiisaka warehouse in Kumamoto. The manager said this property is positioned to capture logistics demand from a local semiconductor cluster that includes JASM, Tokyo Electron, and Sony Semiconductor Manufacturing. Planned expansions and infrastructure improvements are expected to support medium- to long-term demand.

Divestment and Market Context

The trust will sell its 50 percent interest in the 100,530 square metre MFLP Yokohama Daikoku warehouse for JPY 11.9 billion. This price is 25.5 percent above its book value from July. Mitsui Fudosan Private REIT will buy the stake in two tranches in early 2027. The combined price equates to JPY 237,000 per square metre.

Upon completion of all transactions, the MFLP-REIT's portfolio will comprise interests in 51 properties with a combined acquisition value of JPY 612 billion ($3.9 billion).

These deals occur as Japan's logistics market shows signs of recovery. According to CBRE's latest market report, vacancy among large multi-tenant facilities in Greater Tokyo fell to 7.8 percent in the second quarter from 9.2 percent three months earlier. Effective rents there rose 1.5 percent quarter-on-quarter.

The recovery remains uneven. Greater Nagoya's vacancy rate declined slightly but remained high at 15.9 percent, with effective rents unchanged. The MFLP-REIT's new Ichinomiya asset adds a fully occupied property in a market where new developments often launch with substantial vacancies.

Institutional Capital Flows

Institutional capital continues to target the Japanese logistics sector. Earlier this month, Ares Management announced its fifth Japan logistics development fund had closed at JPY 612 billion ($4 billion). Backed by a major commitment from the Canada Pension Plan Investment Board, the vehicle has significant investment capacity targeting modern facilities in Greater Tokyo, Greater Osaka, and Nagoya.

Last week, PGIM announced the purchase of the fully leased Tsurugashima II Logistics Center in Saitama prefecture. That 62,700 square metre facility was completed in 2023. The acquisition was among six logistics transactions worth nearly $630 million completed by PGIM across the Asia Pacific region this year.

On MTD TV in June, JLL research director Koji Naito forecast annual Greater Tokyo warehouse rent growth of 2 percent over the next few years. He highlighted the role of listed trusts in supporting deals. "Once J-REITs are back in the buyer pool, the market will be revitalising as well," Naito said.