NTT UD REIT Upping Stake in Tokyo Mixed-Use Complex With $99M Investment

Japan’s NTT UD REIT has agreed to increase its 15 percent interest in a Tokyo mixed-use complex to 34.2 percent via a JPY 14.9 billion ($99 million) stake acquisition from the trust’s sponsor.

The complex, known as Granpark, is a five-minute walk from Tamachi railway station in Minato ward and consists of an office tower, a rental residential building, a mall and green areas. The 1996-vintage project spans 160,043 square metres (1.7 million square feet) of floor space and was built by the REIT’s sponsor, NTT Urban Development, a real estate arm of the Japanese telecom giant.

NTT UD REIT previously acquired its 15 percent stake in Granpark for JPY 11.5 billion in November 2013 as it sought to increase the share of central Tokyo office buildings in its portfolio.

“The acquisition will contribute to improvements in the portfolio quality and profitability, and the decision was made for the purpose of aiming to expand external growth opportunities by strengthening of cooperation with the NTT Group,” the trust’s manager said Thursday in a release.

Itabashi Residential Deal

The 34-storey Granpark Tower office building provides a standard floor area of 2,000 square metres and is 98.4 percent occupied, while the Granpark Heights residential block has 172 rental apartments across 28 floors. The Granpark Plaza mall is a mix of restaurants, shops and five conference venues.

The proposed acquisition of the Granpark stake, due to complete on 14 March, translates to JPY 484,900 per square metre of built area, up slightly from the JPY 479,047 paid by the trust for its initial stake more than a decade ago.

Also Thursday, NTT UD REIT announced plans to acquire a 48.1 percent stake in a suburban Tokyo residential complex for JPY 2.8 billion ($19 million).

The 2008-vintage Garden Itabashi Hikawacho, owned by architecture division NTT Facilities, sits in Itabashi ward in the capital’s northern reaches near Saitama prefecture and comprises 279 rental units. The acquisition price pencils out to JPY 532,319 per square metre of built area.

The interests in the two freehold assets will increase NTT UD REIT’s portfolio to 62 properties with a total acquisition price of JPY 307.3 billion ($2 billion).

Office Recovery Afoot

Average Grade A office rents in Tokyo’s five central wards, including Minato, rose 0.5 percent on a quarterly basis in the October-December period to JPY 107,699 per square metre per month, according to Savills. Grade A office vacancy in the five wards tightened by 0.2 percentage points to 3.2 percent.

“A moderate recovery has taken hold in the Tokyo office market, and the limited supply in 2024 should help to stabilise the situation further,” the agency said.

In the capital market, Japan saw JPY 1.56 trillion ($10.4 billion) in office investment volume for the whole of 2023, down 39 percent from the year before, MSCI reported.

The commercial real estate market in Asia’s second-largest economy finished the year on a subdued note as changes to the policy of yield curve control raised the prospect of higher interest rates in 2024 and beyond, the data provider said.