PROLOGIS, the world's biggest publicly traded warehouse developer, plans to double investment in Asia and Japan to as much as US$12 billion, Chief Executive Officer Jeffrey Schwartz said in an interview yesterday with Bloomberg News.
ProLogis will double its Japan portfolio to 1.12 trillion yen (US$9.5 billion) in the next three years and plans to double its investment in the rest of Asia to US$2.5 billion this year, Schwartz said. Steps to expand will include a staff increase in Asia of between 20 percent and 25 percent in the next 12 months, he said. ProLogis has 750 employees in the region.
The company plans to expand in Asia through "organic growth, development starts, acquisitions in Japan, the same in China and Korea as well as India," Schwartz said. He was in Tokyo for meetings with clients.
Denver, Colorado-based ProLogis expanded its holdings in Japan by 25 percent at the start of this month when it bought 17 properties from Matsushita Electric Industrial Co for 85 billion yen. Land prices are rising in Japan after ending a 15-year decline in 2006, prompting Matsushita and other non-real estate companies to sell property housing their businesses and lease it back.
ProLogis has invested 560 billion yen in Japan since 2001 and owns 86 distribution centers with more than 2.4 million square meters of floor space. ProLogis is developing a further 460,000 square meters of space in the country.
"The opportunity in Japan is more of reconfiguration of supply chain," Schwartz said. "There were a lot of smaller inefficient distribution facilities in Japan."
ProLogis may set up a third fund with GIC Real Estate Pte, a property unit of the Singapore government's investment arm, to invest in Japan that will be bigger than the second fund of US$3 billion next year, Schwartz said.
"We need to create a new fund to accommodate the development we have under construction," said Schwartz.
The fund will be bigger than the previous one "given the way we've scaled our business here."
AMB Property Corp, the second-largest US industrial real estate investment trust, owns 27 distribution sites in Japan with more than 9.6 million square feet in Tokyo, Osaka and Nagoya, including 4.3 million square feet under development.
ProLogis said last month that it will spend US$90 million on warehouses in northern China as trade in the region surges. The company plans to quadruple its investments in China to US$2 billion by the end of 2010.
Schwartz last week raised the company's 2007 forecast for spending on new developments to as much as US$4 billion, up from an earlier projection US$3.6 billion.
Funds from operations, a measure of income commonly used by real estate investment trusts, should rise to between US$6.25 and US$6.40 a share in three years, Schwartz said earlier. Its current projection is between US$3.95 and US$4.10 a share for 2007, according to the company's second-quarter earnings report.