Trading Firms, Real Estate Developers Eye Industrial Rental Ops

Tuesday, July 5, 2005

Trading Firms, Real Estate Developers Eye Commercial Rental Ops

TOKYO (Nikkei)--Major trading houses and real estate companies are acquiring or building warehouses and distribution centers for rental purposes in light of increased direct-marketing activity and small-lot deliveries.

Faced with growing online sales and demand for quick deliveries, retailers and manufacturers are seeking responsive distribution networks that suit their needs. Rental facilities are particularly in demand.

In the current fiscal year, Mitsubishi Corp. (8058) plans to purchase five properties, including a distribution center. The acquisitions will be transferred to a real estate investment trust slated for listing in fiscal 2005, enabling the trading company to secure stable rental income.

Shoei Co. (3003) also plans to buy a distribution center in fiscal 2005, in addition to several more properties. In addition to an acquisition in Osaka, the firm is scheduled to purchase properties in the Tohoku and Kanto regions as part of efforts to secure a new source of rental income.

U.S. real estate developer ProLogis has already bought 25 distribution facilities in Japan, valued at about 200 billion yen as of mid-June. It plans to develop about 10 commercial properties in Japan, including distribution centers, boosting total asset value by more than 70 billion yen.

Japan Logistics Fund Inc. (8967) a REIT specializing in distribution facilities, plans to roughly quadruple asset value in three years to 100 billion yen.

(The Nihon Keizai Shimbun Tuesday morning edition)