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Jones Lang Unit to Sell Japanese Assets?

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Chicago-based real estate investment trust (REIT) Jones Lang LaSalle Inc.’s (JLL - Free Report) wholly owned subsidiary LaSalle Investment Management is contemplating the divestiture of a portfolio of warehouses in Japan, according to a Bloomberg report.

The properties, which include 9 storage buildings, are located in Tokyo and Osaka and are valued at around ¥85 billion ($902 million) by one of the prospective bidders, according to the report.

As a matter of fact, the industrial property market in Japan is showing signs of stability. With a rise in demand for modern storage facilities, the market for distribution centers are recovering and vacancy rates are falling. Industrial REITs are expanding their business in order to capitalize on the opportunity and meet the improving property values and growing institutional demand for quality properties.

For warehouses in Tokyo, the vacancy rate has decreased to 3.7% in the fourth quarter of 2012 from as high as 20% in Sep 2009, according to the report, which cited data from CBRE Group Inc. .

This rebound in the market for distribution centers has attracted investors and several industrial REIT initial public offerings (IPO) have come out recently. These stocks have gained considerably since then.

These include the IPO of Nippon Prologis REIT Inc., which was set up by Prologis Inc. (PLD - Free Report) and that of Global Logistic Properties Ltd. (GLP), which is partially-owned by the Government of Singapore Investment Corp.

We believe that if the sale off materializes, it would auger well for Jones Lang LaSalle Inc.’s subsidiary, LaSalle Investment Management, which would be able to strengthen its overall financial position.

Jones Lang LaSalle Inc. has a Zacks Rank #3 (Hold). However, another REIT that is currently performing well and is worth a look includes Federal Realty Investment Trust (FRT - Free Report) that carries a Zacks Rank #2 (Buy).

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