goodman set to pounce as japan beckons again

Goodman set to pounce as Japan beckons again

Florence Chong From: The Australian June 17, 2010 12:00AM


AFTER lying low in Japan for more than a year, listed industrial property trust Goodman Group plans to "reignite" its interest in the Asian nation in response to investor demand.

Goodman's chief executive, Greg Goodman, told The Australian there was increasing interest from global pension groups and sovereign wealth funds in the Japanese market.

"They have approached us to do something in Japan," he said. "We are in relatively advanced negotiations on two or three potential projects."

Mr Goodman said that if Goodman succeeded in landing those deals, they would be the first projects in 18 months for the group in Japan.

"We have over a billion dollars (invested) in Japan." he said. "We are starting to refocus on Japan to capture the emerging opportunities in that market."

Mr Goodman said the Japanese market was very deep, with a lot of industrial redevelopment projects still to happen.

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"There are good opportunities in Japan available at good margins," he said.

"The market has re-priced and is relatively attractive for large pension funds and sovereign wealth funds."

He said Goodman Group stopped its activities in Japan -- as it did in Australia and around the world -- at the peak of the global financial crisis.

Goodman and its joint venture partners -- Macquarie Group and J-REP -- operate two wholesale funds which collectively own 15 assets, valued at $1.1 billion. It was set up in 2008. J-Rep, listed on Tokyo's second board, is majority co-owned by Goodman and Macquarie Group. The stake was acquired for about $300 million in 2007.

Potentially, development in Japan would be funded through its existing wholesale funds, and it could also create new vehicles for new strategic investors. In the Asia-Pacific, Mr Goodman said the group intended to focus on three key markets -- Japan, China and Australia. But globally, its centre of activity was Europe.

The group last week raised $1.3bn from the US-based institutional CBRE Investors, which has the first right of refusal on its European and British projects.

So far, the group has raised close to $2bn from strategic partners, with plans to do additional capital raising of at least $500m over the next 12 months.

He said large global funds allocated between 10 and 15 per cent of their property weightings to industrial assets. He estimated that those institutions had invested between $US50bn ($58.5bn) and $US150bn collectively in property. The Canada Pension Plan Investment Board has committed to invest between $US400m and $US500m in Goodman's China projects, and a further $450m in Australia through the newly established Goodman Australian Development Fund.

Goodman is developing $300m worth of projects in Australia.

Globally, it has a development book of $1.5bn a year and, over the next six to seven years, expects to work on $10bn worth of projects.

"The group's balance sheet will not be required to fund our long-term development pipeline. We are raising third-party capital around the world to invest in our funds," he said.