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Business deals

Blackstone to buy Daiwa House logistics centers for $523m

US private equity fund eyes growth in e-commerce triggered by coronavirus

U.S. private equity fund Blackstone has been actively investing in logistics facilities in Japan as it looks to capitalize on the growth of e-commerce. (Source photo by Kaisuke Ota and AP)

TOKYO -- Blackstone will purchase four logistics facilities in Japan from Daiwa House Industry, Nikkei has learned, as the U.S. private equity group seeks new investment opportunities in Japan amid growing e-commerce business triggered by the novel coronavirus outbreak.

Logistics centers are drawing investors' attention as the pandemic prompts more people to shop online. The use of these facilities is rising, along with inventories, and e-commerce is expected to continue growing over the long term. Blackstone has been actively investing in logistics properties in Japan, spending more than 100 billion yen ($950 million) in 2019.

The four facilities in the latest deal, which will cost around 55 billion yen ($523 million) in total, are located in the Kanto region, which includes Tokyo, as well as the central Chubu region. Daiwa House will continue to manage the facilities after Blackstone's purchase, and the warehouses will retain Daiwa House's DPL brand.

Blackstone is expected to own the properties over the long term, as the company believes they will continue to operate at high occupancy because they are vital to efficient e-commerce deliveries. The U.S. private equity fund will also support Daiwa House as it expands its logistics property business in the U.S. and Europe, further enhancing their partnership.

This is the first time Daiwa House will sell multiple facilities at one time to an overseas private equity fund. The Japanese company has sold, in principle, developed properties to the real estate investment trust run by a group company, but Blackstone is believed to have proposed a higher price than the price sold to the investment trust.

Daiwa House is expanding its logistics property development business. It had a total area of 8.13 sq. kilometers under management, in 251 buildings, as of March, including those under construction. That makes it one of the largest developers in the sector in Japan. The company will also start building 32 new facilities this fiscal year.

Growth in Daiwa's logistics property business has been fueled by multitenant facilities, which allow multiple companies to use the same space. 

Daiwa House in June revised its midterm plan through March 2022, increasing its planned spending on business-use real estate developments, including logistics facilities, from 350 billion yen to 650 billion yen. The company is eager to expand from Tokyo and nearby areas to big cities in other parts of Japan.

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