From Milestone to Momentum -
How KJRM Turned Tenant Needs into New Growth
IIF Atsugi Logistics Center III was acquired by Industrial & Infrastructure Fund Investment Corporation in March 2012. At the turning point of its 40th anniversary, IIF realized its first on-book development in response to the needs of end tenants. This initiative has become the foundation for subsequent redevelopment, paving the way for new internal growth.
CHAPTER 01Supporting the Logistics Industry through Real Estate and Driving Value Creation
The IIF Atsugi Logistics Center III (“Atsugi LC III”) is located within an industrial park facing a major arterial road near the Ken-O Expressway interchange, offering 24-hour operation potential—an exceptionally rare and highly valuable location.
At the time, approximately half of the designated floor area ratio (200%) remained unused, while current rent levels were below market rents. These conditions signaled meaningful upside potential for the future.
In this context,
With the fixed-term building lease agreement with our existing tenant, Tokyo Logi Factory Co., Ltd. (hereinafter referred to as "the Tenant"), a major logistics 3PL (third-party logistics) company, set to expire in February 2022, we had several options: continued leasing or redevelopment. However, given the current trend of increasing demand for frozen foods, we decided to rebuild the building into a refrigerated and frozen warehouse.
By adopting an on-book redevelopment method in which buildings are demolished and new buildings are constructed while retaining ownership of the land, development profits can be enjoyed without leaking to the outside world due to increased real estate value, and revenue downtime can be avoided by securing rent income even during the development period.
A long-term reservation agreement was concluded with the tenant, and tenant risk was eliminated by pre-determining Oisix La Daichisha as the end tenant.
As a result, the appraisal value and unrealized gains have improved significantly compared to before the redevelopment.
They thoroughly considered how to best contribute to increasing unitholder value, and this became a model case of how "trust with tenants creates value."
CHAPTER 02Value Creation through a Chain of Redevelopments Using Diverse Schemes
Following the success at Atsugi LC III,
another on-book redevelopment was realized at IIF Hamura Logistics Center (“Hamura LC”), also occupied by the same Tenant.
Furthermore, at IIF Narashino Logistics Center I & II, redevelopment is underway through an off-book scheme in collaboration with a leasing company, selected for its scale of operations.
With logistics demand continuing to rise, especially for IIF—which has held logistics facilities since its J-REIT listing—the property portfolio represents critical bases for many tenant companies. Given the unused floor area ratios that can be exploited to enhance value, numerous companies are expressing needs for new bases or consolidations. Leveraging the operational expertise cultivated by KJRM and its long-standing relationships with tenants and developers, IIF continues to explore and execute various development schemes, converting them into concrete Value Creation.
CHAPTER 03Continuing Challenges toward the Future
Through on-book redevelopments—where IIF rebuilds while continuing to earn ground rent—and off-book REIT-bridge schemes, which minimize revenue downtime and capex burden during redevelopment, IIF has realized internal growth by increasing both NOI and appraisal values.
Looking ahead, beyond simple acquisitions and disposals of logistics facilities, IIF will continue to devise diverse approaches—redevelopment, expansion, and renovation—in partnership with tenants. By fully utilizing relationships with tenants, leasing companies, and general contractors, IIF is committed to the next phase of Value Creation.
