Mapletree Greater China Commercial Trust to acquire 6 office properties in Greater Tokyo for 60.9b yen

The Japan portfolio comprises three properties in Tokyo; two properties in Chiba; and one in Yokohama.
The Japan portfolio comprises three properties in Tokyo; two properties in Chiba; and one in Yokohama.PHOTO: MAPLETREE GREATER CHINA COMMERCIAL

SINGAPORE - Mapletree Greater China Commercial Trust (MGCCT) Management on Wednesday morning announced that the group has entered into various conditional agreements to acquire a 98.5 per cent stake in a portfolio of six freehold commercial properties located in Greater Tokyo for 60.9 billion yen (S$753.4 million).

Subject to and upon completion of the proposed acquisition, MGCCT will be renamed "Mapletree North Asia Commercial Trust".

DBS Trustee Limited served as the trustee of MGCCT in this deal with vendor, MJOF Pte Ltd. MJOF is a private real estate closed-end fund managed by Mapletree Investments Japan Kabushiki Kaisha (MIJ) with Mapletree Real Estate Advisors (MREAL) as the investment adviser.

Both MIJ and MREAL are indirect wholly-owned subsidiaries of Mapletree Investments or the sponsor. Mapletree Investments holds an approximate stake of 36 per cent in MJOF.

In a press statement on Wednesday, MGCCT Management said the Japan portfolio is expected contribute a net property income yield of 4.8 per cent, and be distribution per unit accretive.

In addition, the agreed portfolio value of 63.3 billion yen represents a average discount of about 1.05 per cent from two independent valuations conducted as of March 1, 2018.

Said CEO of MGCCT Management, Cindy Chow: "The market provides attractive commercial real estate acquisition opportunities, with largely freehold land tenure, and at relatively higher yield spread against the local cost of funds, attributes which are not presently available in MGCCT's existing markets."

Added Ms Chow: "We believe that the entry into Japan will provide a wider pool of acquisition opportunities. The proposed acquisition of the Japan portfolio, strategically located near to transportation hubs will enhance MGCCT's geographical, tenant and sector diversification, and increase the total number of assets from three to nine."

The Japan portfolio comprises three properties in Tokyo (IXINAL Monzen-nakacho building, Higashi-nihonbashi 1-chome building and TS Ikebukuro building); two properties in Chiba (SII Makuhari building and Fujitsu Makuhari building); and one in Yokohama (ABAS Shin-Yokohama building).

The total gross floor area for these developments stands at 1.65 million square feet, with a weighted average lease expiry of 5.8 years as at Dec 31, 2017. Occupancy rate as at the end of last year is 99.9 per cent, with 21 tenants.

Including acquisition-related expenses, the total acquisition cost is expected to be approximately 62.3 billion yen.

MGCCT Management intends to finance this through a combination of debt and proceeds from an equity fund raising. Details and timing of this equity fund raising have not been determined, the reit manager said.

Separately, MGCCT Management on Wednesday also announced that its fourth-quarter and full year results for the year ended March 31, 2018 will be released after the close of trading hours on April 25. A "live" audio webcast of the analyst briefing will be held at 3pm on April 26.

Units in MGCCT last traded 1.7 per cent, or two Singapore cents higher to close at S$1.18 on Tuesday.