Full-scale Move into Logistics Property Business

Sumitomo Corporation (head office: Chuo-ku, Tokyo; president: Kuniharu Nakamura) has concluded a basic agreement on logistics property development with Kokyo Tatemono Co., Ltd. (“Kokyo Tatemono”; head office: Chuo-ku, Tokyo; president: Kohei Yamashita), as well as with companies from their respective corporate groups, with the intent of adding the logistics property business as a fourth pillar to its existing office building, commercial facility and housing businesses. Sumitomo Corporation will be engaging in logistics property development on the order of 20 billion yen annually, to include working with other companies to jointly acquire/develop land in Osaka’s Nishiyodogawa Ward for the construction of large cutting-edge logistics facilities.

In parallel with this logistics property development, Sumitomo Realty Management Co., Ltd. (“SRM”; head office: Chuo-ku, Tokyo; president: Hidetoshi Fujibayashi), a Sumitomo Corporation Group company, will be teaming up with Kokyo Asset Management Co., Ltd. (head office: Chuo-ku; president: Takamasa Mita), a Kokyo Tatemono Group company, to solicit investment capital from domestic institutional investors and other silent partners for a sizable logistics fund that invests in domestic logistics facilities.

The plan is to steadily integrate into this fund the Akanehama Logistics Center owned by Sumitomo Global Logistics Co., Ltd. (head office: Chuo-ku, Tokyo; president: Kenichi Watanabe) and developed by Sumitomo Corporation, LogiSquare Soka and LogiSquare Yashio developed by Kokyo CRI Co., Ltd. (“Kokyo CRM”; head office: Chuo-ku, Tokyo; president: Shuhei Yamashita), and other large-scale logistics facilities already in stable operation, and to run the fund using the know-how possessed by Sumitomo Corporation and the knowledge of Kokyo CRE. This logistics fund is expected to reach 50 billion yen, and there are plans to put together a new fund to boost total logistics property assets to 100 billion yen.

Sumitomo Corporation has long been seeking to enhance its property fund business via SRM, and the total assets entrusted in SRM – including logistics properties as well as office buildings, commercial facilities and housing – has now reached 167 billion yen. Given expected increases in demand as antiquated logistics facilities are modernized and e-commerce expands, domestic logistics properties are reliable high-demand assets (the operating rate for existing large-scale properties in the greater Tokyo area is 98%). Sumitomo Corporation is broadly expanding its distribution businesses, among them supermarkets, drug stores, TV shopping, and online sales of household goods, and will use the broad-ranging know-how it has cultivated in numerous fields and in the real estate business to develop and operate/manage high-performance logistics facilities that satisfy the need for greater logistics efficiency, with the aim of improving business earnings in both its development and rental/operation businesses.