News, Events and Media
IDERA launches second private fund for residential properties
IDERA Capital Management, a Japanese real estate asset management company, announced that they launched a second private fund for investing in residential properties in major cities in Japan. The first closing of Japan Urban Residential Investment Club II (JURIC II) was successfully completed with two unnamed European institutional investors. The fund acquired two rental residential properties for middle income families located in Osaka-city and Kyoto-city. IDERA closed the first fund, JURIC I, in March of last year.
IDERA used to be an independent real estate asset manager in Japan. In May of this year, however, IDERA was acquired by Fosun Group, one of Chinese investment group based in Shanghai and listed in Hong Kong Stock Exchange.
Nikkei Newspaper reported in May that Fosun Group, acquired 98% interest in Idera Capital Management for JPY 6.8 billion. At that time Idera had AUM of JPY 163 billion. The portfolio comprises mostly office properties in metropolitan Tokyo. Fosun envisages Idera as avenue for their further active real estate investment in Japan.
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Invincible raises JPY 23.8 Billion, acquires 18 hotel properties
Invincible Investment Corporation, a J-REIT sponsored by US based Fortress, announced that they will raise JPY 23.8 billion by secondary offering and will acquire 18 hotel properties for the aggregate purchase price of JPY 40 billion. The J-REIT has been investing mainly in residential properties in the past. The J-REIT currently has AUM of JPY 78 billion, approximately 75% of which comprises residential properties with the remainder, office, commercial and hotel properties. Prior to the proposed acquisition, however, they revised their investment guideline and defined hotel properties, on top of residential properties, as their core assets.
All of the 18 hotels are lodging specialized hotels, not full-service hotels. They offer overnight, weekly and monthly stay for business travellers and sightseers with limited amenity.
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Mitsui Fudosan announces first capital increase since 32 years – largest capital market transaction in the real estate sector since 40 years
Mitsui Fudosan announces a capital increase by JPY 325 Billion, their first capital increase since 1982. According to a company comment, the dramatic market changes since their 2012 midterm financial planning have triggered this decision.
Over the past decades Mitsui Fudosan depended on bonds and bank lending. Companies have raised about $17 billion in Japan so far this year through equity-linked deals, compared with $19 billion during the same period last year and just $5.7 billion in 2012, according to Dealogic.
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LaSalle acquires a large suburban shopping mall in from BlackRock
According to Nikkei Real Estate Market Report, a fund established and managed by US based LaSalle Investment Management acquired a large shopping mall in suburban Gifu-city, near metropolitan Nagoya. The shopping mall was built in 2006 and has gross floor area of 117,219 sqm. It also accommodates around 5,000 parking lots. It is a typical large-scale suburban shopping mall. The seller is an SPC associated with US based BlackRock. The purchase price was not disclosed. According to an investor familiar with the mall, however, the current value of the property would be around JPY 21 billion.
Invesco sells a commercial property in Osaka-city for JPY 13 Billion
According to Nikkei Real Estate Market Report, US based Invesco sold a commercial building in central Osaka-city. The property, “Prime Square Shinsaibashi”, built in 2007, has 13 floors above ground and one below with gross floor area of 9,729 sqm. It is located in Shinsaibashi in the center of Osaka-city and along the Midousuji Street, the most popular shopping/retail street in Osaka-city. The key tenant of the building is Dolce & Gabbana, an Italian apparel brand, who occupied 1st and 2nd floors. The sales price is around JPY 13 billion. Although purchaser was not disclosed, it is believed to be an SPC associated with US based Elliot Management. Other details are not known.
The private REIT of Mitsubishi Estate acquires a residential property in Osaka
According to Nikkei Real Estate market Report, Nippon Open Ended Investment Corporation, the private REIT of the Mitsubishi Estate Group, acquired a rental apartment property in Osaka-city in September of last year.
The property, “Nostel Court Shin-Osaka”, built in 2007, is a 48-unit rental apartment building. It is located in northern part of Osaka-city and only one stop away from Shin-Osaka bullet train station and also three stops away from JR Osaka station through Osaka subway line. The property was owned by SBI Holdings, an investment company formerly associated with Softbank, until March 2013 from the completion of 2007. Other details are not known.
Private REITs doubled their AUM from one year ago: Strong demand from institutional investors
Nikkei Newspaper reported that, the aggregate AUM of the Japanese private REITs had doubled since one year ago, totaling JPY 500 billion as of the end of 2013. Institutional investors such as pension funds and regional banks have poured their funds into private REITs in view of their stable investment returns. Six private REITs have been established so far and several more will be established this year. They would help supporting Japanese real estate market.
Private REITs are for institutional investors only. Retail investors can not invest in private REITs. Unlike listed J-REITs, value of private REITs will not fluctuate day to day since they are not traded in the exchange. Value of private REITs will be based on net asset value at the semi-annual book close. Such characteristics attract institutional investors.
Average investment yield of private REITs is around 4% currently, higher than that of listed J-REITs, somewhat north of 3%. According to one of the private REITs who made secondary offering last year, investor demand was so strong that they could not accommodate all the investors’ demand at the secondary offering last year. Some of the investors are queuing for secondary offering this year.
Private REITs are getting quite aggressive in procuring real estate assets by their abundant funds. DREAM Private REIT sponsored by Mitsubishi Corporation, for instance, acquired four commercial and logistics properties for JPY 50 billion, doubling their AUM, in December last year. Kenedix plans to establish new private REIT in March of this year, envisaging JPY 30 billion as its initial AUM. The private REIT sponsored by Mitsui Fudosan plans to make secondary offering soon.
Sumitomo Mitsui Trust Research Institute forecasts that the aggregate AUM of Japanese private REITs would reach JPY 1,400 billion within 3 to 4 years.
Conforia Residential REIT raises JPY 21.5 Billion, acquires 22 properties
Conforia Residential REIT, a J-REIT sponsored by Tokyu Land and specialized in residential properties, announced that they will raise JPY 21.5 billion by secondary offering and will acquire 22 residential properties for the aggregate purchase price of JPY 37.4 billion. Before these proposed acquisitions, the J-REIT has AUM of JPY 74.6 billion with a portfolio of 55 rental apartment properties mostly in metropolitan Tokyo.
All of the 22 properties are located in the 23 wards district of metropolitan Tokyo, except for one that is located in Yokohama-city. Including this Yokohama property, locations of the 22 properties are convenient for commute to any major business districts in metropolitan Tokyo. All were built in between 2003 and 2013. The largest property is one in Kita-Sando, CBD Tokyo that has gross floor area of 7,667 sqm accommodating 144 rental apartment units. The purchase price is JPY 4.27 billion. The price tags of the other 21 properties are between JPY736 million and 3.2 billion. Occupancy rates ranges between 89% and 100%, except for one built in April of last year were occupany stand at 72%.
The sellers of the 22 properties are either sponsor of the J-REIT or SPCs associated with the sponsor or its affiliates.
Mitsubishi private REIT acquires rental apartment properties in Tokyo
According to Nikkei Real Estate Market Report, Nippon Open Ended Real Estate Investment, a private REIT sponsored by Mitsubishi Estate, purchased three rental apartment properties in Tokyo in September of this year. The properties are located in Shinjuku-ward and Shinagawa-ward, residential areas convenient for commuting in the metropolitan Tokyo. The seller was Mitsubishi Estate, the sponsor of the private REIT. As of October 2013, the private REIT has AUM of JPY 131.2 billion including these three acquisitions.
Nomura Private REIT acquires a residential property in CBD Tokyo
According to Nikkei Real Estate Market Report, Nomura Real Estate Private REIT (NPR) acquired a rental apartment property in Nihonbashi-Ningyocho, CBD Tokyo in May of this year. The property, “Across Nihonbashi-Ningyocho”, built in 2004, has 13 floors above ground and one below and accommodates 45 rental apartment units, mostly one bed room. It is located in only 3 minutes walk from the nearest subway station, and has great access to any business/commercial district in CBD Tokyo. The seller was a fund jointly managed by Kowa Real Estate Investment Advisor and Max Realty. Other details were unknown.
Mitsubishi Estate private REIT acquired a rental apartment in Yokohama-city
According to Nikkei Real Estate Market Report, Nippon Open Ended Real Estate Investment, a private REIT sponsored by Mitsubishi Estate, acquired a rental apartment property in Yokohama-city in June of this year. The property, “Cresidence Yokohama Koen”, built in 2006, has 15 floors above ground and accommodates 135 rental apartment units, from studio to 3-bed rooms. It is located in downtown Yokohama-city and within three minutes walk from JR Kannai station, having direct access to many business/commercial districts in Yokohama-city and metropolitan Tokyo. The seller was an SPC associated with CLSA Capital Partners, an affiliate of Credit Agricole.
Growth of Private REIT Segment continues with Tokyu Land commencing operation of a private REIT
Tokyu Land Capital Management, a subsidiary of Tokyu Land, announced that they will commence operation of a private REIT within FY 2013. They endeavor to have AUM of JPY 100 billion. Targets for investments are office, commercial and hospitality properties, including hotels and nursing homes. Tokyu Land Group currently sponsors two listed J-REITs and this is the first private REIT for Tokyu Land Group.
Japanese private REIT market started in 2010 when Nomura Real Estate established the first private REIT. Thereafter, Mitsubishi Estate, Mitsui Fudosan, Mitsubishi Corporation, Daiwa Securities and Goldman Sachs made entry in this market. Private REITs currently have aggregate AUM of JPY 400 billion. The private REITs attract institutional investors who prefer low price fluctuations compared to listed J-REITs.
Japan Open End Fund acquires a stake in office property in CBD Tokyo
According to Nikkei Real Estate Market Report, Japan Open End Fund, a private REIT sponsored by Mitsubishi Estate, acquired a 34% stake in a large office property in Yurakucho, CBD Tokyo. The property, “Yurakucho Denki Building”, built in 1975, has 20 floors above ground and 4 below with gross floor area of 70,288 sqm. The seller is Mitsubishi Estate, the sponsor of the private REIT. Acquisition price was not disclosed.
Mitsui Fudosan Private REIT acquires two office properties in Tokyo
According to Nikkei Real Estate Market Report, Mitsui Fudosan Private REIT acquired interests in two office properties in CBD, Tokyo in February 2013. The private REIT has AUM of JPY 104.5 billion with a portfolio of 24 office, residential and accommodation properties as of March, 2013.
One of the acquired properties, “Nihonbashi Koamicho Square Building”, built in 2012, has 9 floors above ground with gross floor area of 8,993 sqm. It is located in 3 minutes walk from nearby subway station, has great commuting access. The private REIT acquired 80% interest in the property. The other property, “Shionogi Honcho Kyodo Building”, built in 1987, has 11 floors above ground and one below with gross floor area of 10,750 sqm. It is in the similar location with the first property. The private REIT acquired approximately 40% interest, whereas the remaining 60% is to be held by Shionogi, a major pharmaceutical company. The acquisition prices were not disclosed.
Mitsui Fudosan Private REIT acquires two residential properties
According to Nikkei Real Estate Market Report, Mitsui Fudosan Private REIT acquired two residential properties in metropolitan Tokyo. Both of these two properties are located within walking distance from JR Meguro station of Yamanote line, the most popular commuter line in metropolitan Tokyo, and have good access to any business/commercial districts in Tokyo.
One of them, “Atria Meguro Tower”, built in 2008, is 183-unit apartment building and has 25 floors above ground and 2 below with gross floor area of 20,550 sqm. The other one, “Cosmo Gracia Meguro”, also built in 2008, is 53-unit apartment building and has 10 floors above ground with gross floor area of 2,466 sqm. the acquisition prices were not disclosed.
Mitsui Fudosan Private REIT commenced its operation in March 2012, and currently has AUM of over JPY 100 billion with 24 investments in a diversified portfolio of office, commercial/industrial and residential/accommodation properties. The private REIT specifically targets for institutional investors.
Mitsubishi Corp’s private REIT acquires a commercial property in Ginza
According to Nikkei Real Estate Market Report, DREAM Private REIT, a private REIT sponsored by Mitsubishi Corporation, acquired a commercial property in Ginza, CBD Tokyo. The property, “the Ginza Seven Building” is a commercial building solely occupied by Spanish fashion brand ZARA currently. It was built in 2003, and has 5 floors above ground with gross floor area of 1,753 sqm. It is located in the center of Ginza, the most popular shopping area in Tokyo. The seller was a SPC associated with Mitsubishi Corporation, the sponsor of the private REIT. The purchase price was not disclosed.
According to Diamond Realty Management, the fund manager of the private REIT, DREAM Private REIT is the first private REIT sponsored by a trading company such as Mitsubishi Corporation. They commenced operation in October 2012 with initial AUM of JPY 32 billion with three properties, including this property. They plan to grow AUM to JPY 150 billion within three years and to JPY 200 billion within five years. The targeted investors are mostly domestic pension funds who prefer long-term stable investment.
Secured Capital acquires a large office building in Sendai-city
According to Nikkei Real Estate Market Report, Secured Capital Investment management acquired an office building in Sendai-city in September 2012. The property, “Azalea Hills”, is located in CBD Sendai-city and within 5 minutes walk from JR Sendai station and municipal subway station. It was built in 2009 and has 19 floors above ground and one below with gross floor area of 24,098 sqm.
Sendai is the largest city in earthquake-hit Tohoku region with population of approximately 2.4 million. The purchase price was not disclosed.
GLP and CPPIB double their Japan J/V to JPY 200 billion
Singapore based Global Logistic Properties (GLP) and Canadian Pension Plan Investment Board (CPPIB) announced that they will expand their investments in GLP Japan Development Venture, their 50/50 J/V for developing logistic facilities in Japan formed in August 2011. The new equity commitment of JPY 58 billion in aggregate will more than doubles the equity allocated to the J/V to JPY 100 billion. With leverage, the J/V’s investment target is now JPY 200 billion and the investment identification period was reset to another three years until 2016.
According to research by CBRE, vacancy rate of multi-tenants logistic facilities in metropolitan Tokyo was only 2.5% in the fourth quarter of 2012. Even facilities under development have already secured 50% of their tenants upon operation commencement. In metropolitan Osaka, existing multi-tenants logistic facilities have been fully occupied in the last four years.
For further details, please see the following GLP announcement;
Mitsubishi’s private REIT acquires apartments
According to Nikkei Real Estate Market Report, Nippon Open Ended Real Estate Investment Corporation (JOE), a private placement REIT sponsored by Mitsubishi Estate, has purchased three rental apartment buildings in metropolitan Tokyo from the sponsor. All the three properties are located in quite convenient residential areas in Tokyo, where access to subways is easy and commutable to anywhere in Tokyo within reasonable time. According to Mitsubishi Jisho Investment Advisors, the REIT manager, all three apartment buildings are almost fully occupied. The purchase prices are not disclosed.
Nippon Open Ended REIT was established in March 2011. As of November 2012, it has assets under management of JPY 62 billion on an acquisition price basis with 13 properties, 70% for office use and 30% for residential. Originally, the majority investors are financial institutions. Pension funds, however, have gradually been interested in investing and, at the capital increase in September of this year, their share was 80% in subscription. On a cumulative basis, the share of pension funds investment is more than 50%. The REIT’s strategy is to lever conservatively, 35 to 45%, and to deliver 4% annual dividend to investors. Currently, overall leverage is 40% and it achieved the dividend target.
Mitsubishi Corp made entry into privately placed REIT
Diamond Realty Management (“DREAM”), a wholly owned subsidiary of Mitsubishi Corporation, announced the establishment of a privately placed open-end real estate fund. The fund, known as DREAM Private REIT (“DPR”), will initially consist of three real estate assets with a combined size of approximately JPY 31.7 billion. The fund’s investment target is commercial and industrial properties with relatively long lease terms. DREAM expects the size of the fund to grow JPY 150 billion in 3 years.
An open-end real estate fund, such as DPR, has different characteristics from those of J-REITs in the sense that the value of investment is not influenced by capital markets fluctuation since it is not listed. DREAM expects steady demand from pension funds and other institutional investors that seek stability with a long-term investment horizon.
For further details, DREAM announcement:
Kenedix sells 22 properties at loss of Y12bn
Kenedix, a Japanese real estate asset manager, announced that they sold or intend to sell equity interest in private funds and owned properties, a total of 22 properties, and revised net profit forecast for 2012 downward by JPY 11.9 billion to net loss of JPY 10.2 billion.
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Kenedix obtains negotiating rights on Shinsei Bank HQ
According to Nikkei Real Estate Market Report, Kenedix, an independent real estate asset management company, won the bidding on the former Shinsei Bank Head Office Building in CBD Tokyo. Market participants expect the bid price by Kenedix to be approximately JPY 51 billion. The 1993 property was purchased by a fund sponsored by Morgan Stanley at the price of JPY 118 billion. The acquisition loan defaulted and the property disposal has been initiated by CMBS holders since the latter half of 2011. The tenant, Shinsei Bank, moved out in November 2010 and the building is currently vacant.
The property is an office building with 22 floors above ground and five below ground with gross floor area of 62,423 sqm.
Mitsui Fudosan Group launched open-ended privately placed REIT for institutional investors.
Mitsui Fudosan Group announced the launch of its first open-ended privately placed REIT for institutional investors. The fund is managed by Mitsui Real Estate Investment Management, the wholly owned subsidiary of Mitsui Fudosan Co., Ltd. The initial fund under management is JPY 72.7 billion.
The REIT invests in diversified portfolio of properties, such as office buildings, accommodations, commercial properties and logistic properties. The REIT is designed primarily for pension fund investors who prefer long-term investment with stable income return, at the same time avoiding large fluctuation in net asset value due to change in capital market conditions.
Link: Information on Mitsui Fudosan:
Risa Partners announced that they would become a wholly-owned subsidiary of NEC Capital Solutions
Risa Partners, a real estate investment company, announced that they would become a wholly-owned subsidiary of NEC Capital Solutions, the leasing arm of NEC Corporation Group, through a takeover bid. Risa is famous for its operation of the real estate fund with US-based Grove International Partners which has total assets under management of JPY 127 billion.
Orix Real Estate took over office building
NIKKEI RE reports that Orix Real Estate took over a 13,000 sqm office building at the edge of Tokyo CBD (Shiba, Minato-ward) from Morgan Stanley. The seller is believed to be financed by a real estate fund of Morgan Stanley.
Mitsui Fudosan Investment Advisors acquired apartment
NIKKEI RE reports that Mitsui Fudosan Investment Advisors acquired a 10,000 sqm apartment in eastern Tokyo (Koto-ward).
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