Japan’s JPR REIT Buying 53% Stake in Tokyo Office Block for $190M

Japan Prime Realty Investment Corporation, a TSE-listed REIT, has agreed to acquire a 53 percent stake in a central Tokyo office building for JPY 28.8 billion ($190 million).

Nakano Central Park East, developed by JPR sponsor Tokyo Tatemono, is a 10-storey office block with a gross floor area of 37,871 square metres (407,640 square feet), the trust’s manager said Friday in a release. The 2012-vintage property sits a five-minute walk from Nakano railway station in the same-named ward just west of buzzy Shinjuku.

The company led by executive officer Yoshihiro Jozaki expects to enhance the quality of JPR’s portfolio with the acquisition of a well-situated asset in a leafy, office-heavy neighbourhood.

“Offices are required to have more diverse and sophisticated functions and roles, and purchasers of office buildings have become more selective,” JPR said. “In this environment, enhancing the portfolio’s competitiveness over the medium to long term is increasingly important.”

Nakano Station Improvements

Tokyo Tatemono developed Nakano Central Park East and the next-door Nakano Central Park South in an integrated fashion, with both buildings overlooking the public space of Nakano Shikinomori Park. The standard floor area of the east building is 2,807 square metres, which can be divided into small sections for a variety of purposes, JPR said.

The transaction, scheduled to be completed on 1 March, values Nakano Central Park East at JPY 54.3 billion ($360 million), translating to more than JPY 1.4 million per square metre of GFA. The acquisition price represents a 4.3 percent discount to the attributable appraised value of JPY 30.1 billion.

The building is 92.8 percent occupied by 14 tenants and carries a net operating yield of 3.2 percent and NOI after depreciation of 2.8 percent.

Multiple development projects are underway in the area, which is expected to become more competitive as an office district, according to JPR. A new Nakano station building is scheduled for completion in 2026, providing a new exit and pedestrian deck on the north side facing Nakano Central Park East.

“This will significantly enhance access to the property,” JPR said.

Trust Nearing $3.3B

After the latest acquisition, to be financed with loans and the company’s own funds, JPR’s assets will surpass JPY 500 billion ($3.3 billion) based on purchase prices.

The trust’s flagship asset is the land and leasehold interest of the 38-storey Otemachi Tower in the Tokyo commercial district of the same name, with a 2012 purchase price of JPY 36 billion and an appraised value of JPY 56.7 billion.

JPR on Friday reported 2023 net income of JPY 15.5 billion, down 9.4 percent from the previous year, on revenue of JPY 35.6 billion, down 4 percent.