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Mitsui and Mitsubishi Estate to participate in logistics facilities development business in China

Jul. 11, 2014


Mitsui & Co., Ltd.
Mitsubishi Estate Co., Ltd.


Main Contents

Mitsui & Co., Ltd. ("Mitsui", Head Office: Chiyoda-ku, Tokyo, President & CEO: Masami Iijima) and Mitsubishi Estate Co., Ltd. ("Mitsubishi Estate", Head Office: Chiyoda-ku, Tokyo, President & CEO: Hirotaka Sugiyama) (collectively, the "Companies") have agreed to move into the logistics facilities development business in China in partnership with Beijing Properties (Holdings) Limited of Hong Kong ("BPHL"). The Companies have concluded a shareholders agreement and a share subscription agreement providing for the acceptance of a third-party allocation of new shares issue by China Logistics Infrastructures (Holdings) Limited ("CLI"), a logistics facility developer and wholly owned subsidiary of BPHL.

The Companies will acquire a 35% stake in CLI through a newly established investment vehicle (60% owned by Mitsui, 40% by Mitsubishi Estate). The total equity participation in CLI will amount to approximately ¥14.7 billion.

Demand for modern logistics facilities in China is rapidly increasing to keep pace with growth in consumption. Sophisticated logistics services are also becoming necessary due to the emergence and rapid growth of e-commerce. However, modern logistics facilities to meet these needs are not sufficient at present, and the demand for facilities is therefore expected to increase in the future.

The aim of this business is to provide high-quality logistics facilities to the Chinese market on a continuing basis by combining competitive capabilities for sourcing of development land and project management by BPHL, a Hong Kong listed state owned company under the Beijing Municipality Government, with the wide range of expertise of the Companies in development and leasing of logistic facilities as well as asset management for industrial REITs.

CLI will develop and acquire logistic facilities in strategic locations in key Chinese cities, with the targeting its asset size more than ¥100 billion within 3-4 years after the participation of the Companies, which will pave the way to forming a new REIT comprised of the logistic facilities developed by CLI in the near future.

Mitsui sees this business as an opportunity to utilize its integrated strengths by combining its expertise related to logistics facilities development, logistics operations and financial business, including industrial REITs in Japan and Singapore. The company is also trying to deepen its involvement in property development business in China and the Asian countries.

The Mitsubishi Estate Group is expanding its business activities in Asia in addition to its real estate development and ownership in the United States and Europe. It established a subsidiary in Singapore in 2008 and opened a representative office in Shanghai, China in 2011, followed by the establishment of a subsidiary there in April 2013. Its activities in China have hitherto mainly focused on condominium and outlet malls projects, and furthermore it plans to enter into logistics and warehousing development business to diversify its activities and broaden its income base in China by leveraging its expertise and track record in logistics development projects in Japan and the United States.

1. Profile of Beijing Properties

Company Name Beijing Properties (Holdings) Limited
Registered Office Hong Kong Special Administrative Region, the People's Republic of China
Established July 2, 2009 (Date of acquisition of Hong Kong listed company)
Representative Qian Xu (Chief Executive Officer)
Number of Employees Approx.145 (as of December 2013)
Total assets (as of December 2013) Approx. HK$5.45 billion (Approx. ¥70.9 billion)
Main shareholders and shareholdings ratio(as of July 2014) Beijing Enterprises Holdings Limited. *: 67.4% (indirect shareholding ratio)
Other investors: 27.35%
Kerry Group: 5.25%

* A company owned by the Beijing Municipality Government

Businesses Property development in China

2. Profile of China Logistics Infrastructures

Company Name China Logistics Infrastructures (Holdings) Limited
Registered Office Hong Kong Special Administrative Region, People's Republic of China
Established May 10, 2012
Representative Li Changfeng (Chairman)
Number of Employees Approx. 50 (as of December 2013)
Total assets (as of December 2013) Approx. HK$3.5 billion (Approx. ¥45.5 billion)
Shareholders (after the new share subscription) BPHL: 65%
SPV formed by Mitsui and Mitsubishi Estate: 35%
Businesses Development of logistics facilities in China (In operation: 2, Under construction: 1)

3. Ownership Scheme (after the Share Issue)

Ownership Scheme (after the Share Issue)

4. Logistics facilities owned by CLI

(1) Shanghai Waigaoqiao Logistics Center (Shanghai Waigaoqiao Bonded Logistics Park)

Outline This large-scale bonded cargo logistics center is located in the China (Shanghai) Pilot Free Trade Zone and is adjacent to Waigaoqiao Port, which boasts the highest container traffic in China.
Site area Approx. 192,000 m2 (Gross floor area: Approx. 212,000 m2)

(2) Tianjin Airport Logistics Center (Tianjin Airport International Logistics Zone)

Outline This logistics center provides a bonded warehouse (in operation) and a non-bonded warehouse (under construction) in the Tianjin Airport International Logistics Zone. The bonded warehouse is equipped with customs clearance and quarantine facilities and is used to process all goods imported through Tianjin Airport (Approx. 100,000 tons/year). Courier companies expanding business in China are one of the potential tenants for the non-bonded warehouse.
Site area Approx. 46,000 m2 (Gross floor area: Approx. 27,000 m2)

Shanghai Waigaoqiao Logistics Center

Shanghai Waigaoqiao Logistics Center

Notice:
This announcement contains forward-looking statements. These forward-looking statements are based on Mitsui's current assumptions, expectations and beliefs in light of the information currently possessed by it and involve known and unknown risks, uncertainties and other factors. Such risks, uncertainties and other factors may cause Mitsui's actual results, financial position or cash flows to be materially different from any future results, financial position or cash flows expressed or implied by these forward-looking statements. These risks, uncertainties and other factors referred to above include, but are not limited to, those contained in Mitsui's latest Annual Securities Report and Quarterly Securities Report, and Mitsui undertakes no obligation to publicly update or revise any forward-looking statements.
This announcement is published in order to publicly announce specific facts stated above, and does not constitute a solicitation of investments or any similar act inside or outside of Japan, regarding the shares, bonds or other securities issued by us.

Information

For inquiries on this matter, please contact

Mitsui & Co., Ltd.
Corporate Communications Division
Tomomi Taura
Telephone: +81-3-3285-6645
Facsimile: +81-3-3285-9819
Mitsubishi Estate Co., Ltd.
Corporate Communications Department.
Telephone: +81-3-3287-5200