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Goodman Commits To J-Rep Business In Response To Customer And Investor Demand

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Fuseworks Media
Fuseworks Media
Goodman Commits To J-Rep Business In Response To Customer And Investor Demand

Macquarie Goodman Japan Pte Ltd (MGJ), a 50/50 joint venture between Goodman Group (Goodman) and Macquarie Group (Macquarie), lodged a proposal with Japanese regulatory authorities on Friday to strengthen its Japanese logistics offering, conducted via J-REP Co., Limited (J-REP).

Transaction overview:

+ A tender offer bid made to all shareholders and option holders,

providing liquidity to those shareholders and potentially increasing

Macquarie and Goodman's interest in J-REP;

+ Provision of development funding to J-REP and granting of share

acquisition rights in J-REP;

+ Establishment of the Japan Logistics Development Vehicle (JLDV),

seeded with a pre-committed development to leading Japanese third

party logistics operator, Nippon Express; and

+ An intention to rebrand J-REP to Goodman.

Tender offer

In 2007, MGJ purchased a controlling interest in J-REP and as at the date of this announcement holds 51.7% of the total outstanding securities.

The tender offer, lodged with Japanese regulatory authorities provides an opportunity for shareholders to obtain liquidity in respect of their investment in J-REP, with MGJ's intention to make J-REP a wholly owned subsidiary of MGJ.

The tender offer price of 35,000 JPY per share compares to J-REP's closing price on 15 October 2010 of 24,650 JPY.

The tender offer opened on 18 October 2010 and will be available for acceptance by shareholders until 1 December 2010.

J-REP's board of directors (excluding Goodman and Macquarie related directors) have voted unanimously to recommend that J-REP's shareholders accept the tender offer.

Funding

MGJ will provide J-REP with a new 3.5 billion JPY ($A43.5 million) two year revolving loan facility, primarily to be used by J-REP to co-invest in development projects alongside Goodman, Macquarie and, potentially, other third party investors who will invest via JLDV as outlined below.

As part of the loan facility, J-REP will grant 100,000 share acquisition rights with an exercise price of 35,000 JPY to other Goodman and Macquarie entities.

Japan Logistics Development Vehicle (JLDV)

Additionally, a new Japanese focused development vehicle will be established with an initial equity commitment totalling 4 billion JPY ($A49.7 million) provided equally from Goodman and Macquarie. Furthermore, J-REP may co-invest up to 20% in the assets to be acquired pursuant to these arrangements, and be responsible for the sourcing of new development opportunities and the provision of development management and asset management services.

The JLDV will undertake its development activities primarily on a pre-committed basis with a focus on the Tokyo and Osaka markets. The initial seed development sourced by J-REP for the vehicle is a 33,000 sqm warehouse facility for Nippon Express in Tokyo. The estimated date of practical completion of the development is December 2011. Nippon Express has entered into an agreement for lease for a fixed term of 10 years.

Rebranding

At the appropriate time, it is proposed to rebrand J-REP to Goodman Japan.

Goodman Group's CEO, Greg Goodman commented that "the above initiatives provide a catalyst for Goodman to fully expand its global network into Japan and provides us with the platform to capitalise on the opportunities that exist for the Japanese market as a result of the burgeoning growth in China and reduced competition locally.

"Today's announcement delivers a clear operating strategy for the business to move forward with, and provides our customers and investors with a truly integrated property solution in Asia Pacific."

About Goodman: visit http://www.goodman.com

About J-REP: visit http://www.jrep.co.jp

Note: Currency conversions are calculated at the rate of JPY/AUD 80.48.

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