SOFAZ committed $100 mln into E-Shang Redwood’s “Redwood Japan Logistics Fund II” (RJLF II) fund. The fund’s total size is $1 bln and is managed by “E-Shang Redwood” Group, a leading Asia Pacific logistics real estate developer and operator. This investment is consistent with SOFAZ’s real estate strategy of building a diversified investment portfolio across geographies, real estate types and investment strategies. Fund has a target net IRR to investor of 15% with a life of 5-7 years. The investment strategy of RJLF II is development, letting and sale of institutional-quality logistics centers in supply constraint markets of Tokyo, Osaka and Nagoya in order to capitalize on shortage of modern logistics space. “E-Shang Redwood” Group invests in and operates projects across China, Japan, South Korea, and Australia.

In 2016, modern logistic centers comprised 6% of the overall logistic facilities across Japan, with vacancy rate of only 6.8%. Over the last five years, e-commerce companies have generated strong demand for modern logistics centers, with a compounded annual growth rate of 9%, which is projected to continue in the future.