Sept. 4 (Bloomberg) -- ProLogis, the world’s biggest warehouse owner, said it’s in joint-venture talks to help finance property development in Japan and may reach an agreement this year.

“We’re in talks with a number of companies about possible joint ventures,” Mike Yamada, President of ProLogis’s Japan operations, said in an interview. He declined to name potential partners or identify the projects. “We may be able to announce more within this year.”

The Denver-based company owns 370,000 square meters (91 acres) of undeveloped land in Japan including properties in the Kanto region around Tokyo and in the Osaka, Sendai and Kyushu regions, Yamada said.

Owners of distribution centers, warehouses and other industrial buildings have been hurt as the global recession cut production and consumer demand. Chief Executive Officer Walter C. Rakowich said in April that ProLogis is dealing with a “challenging environment” for warehouse space.

ProLogis said Aug. 31 it’s in discussions with Tokyo-based trading company Mitsui & Co. for a possible partnership agreement. A joint venture with Japan Logistics Fund, a local real-estate investment trust, has already been agreed on, ProLogis said Sept. 2.

“We want to develop most of our land with partners,” Yamada said. “Despite this harsh environment for financing, by tapping into JLF’s funds, we now have more sources for money.”

Reducing Risk

Mitsui holds a controlling interest in the asset management company of Tokyo-based JLF.

“JLF has a low proportion of debt and the reserves to acquire properties,” said Takashi Ishiza, an analyst at Mizuho Securities Co.

ProLogis said in November it would reduce debt and risk. This year, the company sold its operations in China and property fund interests in Japan to GIC RE, the real-estate investment company of the Government of Singapore Investment Corp., for $1.3 billion.

ProLogis received 12.6 billion yen ($136 million) from GIC RE for the sale of a 637,000 square-foot building in Japan. ProLogis also sold its 20 percent stake in a fund that GIC RE now fully owns, which included 27.1 million square feet of properties.

“Assets under management on our balance sheet went from 700 billion yen in November 2008 to 200 billion yen now,” Yamada said.

The company has more than 475 million square feet of industrial space in North America, Europe and Asia.

To contact the reporter on this story: Anna Kitanaka in Tokyo akitanaka@bloomberg.net; Katsuyo Kuwako in Tokyo at kkuwako@bloomberg.net

Last Updated: September 4, 2009 06:09 EDT