Marubeni’s United Urban J-REIT Selling Two Kawasaki Malls for $125M

United Urban Investment Corporation has agreed to sell a pair of Greater Tokyo malls for a total of JPY 18.4 billion ($125 million), the TSE-listed REIT announced late last week.

The trust sponsored by Japanese conglomerate Marubeni will offload the ageing retail assets in Kanagawa prefecture’s Kawasaki, south of Tokyo, at a 9.6 percent premium to their combined book value, according to a stock filing.

The older of the two, the 1993-vintage Miyamae Shopping Center, has maintained stable operation as a multi-tenant property since acquisition in 2007 but needs age-related repairs and renovations, the REIT’s manager said. The 2008-built Luz Musashikosugi, meanwhile, faces rising maintenance and repair costs that threaten future profitability.

“In addition to the composition and profitability of its overall portfolio, United Urban is working to improve the quality and profitability of our portfolio through the replacement of properties, taking into comprehensive consideration factors such as the stability of cash flows and future potential of each property,” the manager said.

Hulic Snaps Up Luz

Japanese real estate giant Hulic is buying the five-storey Luz Musashikosugi for JPY 12.9 billion, up from the asset’s appraised value of JPY 11.9 billion and acquisition value of JPY 12.2 billion. The fully occupied facility has 8,273 square metres (89,050 square feet) of leasable floor space and rakes in annual rental revenue of JPY 503 million.

A non-related domestic company is purchasing the four-storey Miyamae Shopping Center for JPY 5.5 billion, up from an appraisal value of JPY 5.2 billion and an acquisition value of JPY 5.3 billion. The mall’s 10,441 square metres of leasable space is 100 percent occupied, generating JPY 257 million in yearly rent income.

Both transactions are scheduled to close by year-end. The proceeds from the sales will be used for unitholder distributions and to replenish internal reserves that were drawn down to buy the Smile Hotel Premium Osaka Honmachi last month for JPY 8.7 billion, according to the manager.

Upon completion of the divestments, United Urban’s portfolio will comprise 141 properties with a total acquisition value of JPY 693.7 billion ($4.7 billion).

Eventful Month

The trust’s planned disposals come after sponsor Marubeni announced on the first of July that it had joined with Japan’s second-largest life insurer, Dai-ichi Life Holdings, to launch a JPY 400 billion ($2.8 billion) real estate investment fund.

The new fund was announced on the same day that the two firms completed the integration of their domestic real estate businesses into a 50:50 joint venture, Dai-ichi Life Marubeni Real Estate, which aims “to provide a wide range of high-quality investment opportunities to meet the increasing real estate investment and management needs of individuals and pension funds”.

The new entity integrates seven real estate units from the two companies, spanning businesses including real estate asset management, real estate development and leasing and property management. The JV’s combined assets under management stood at JPY 1.8 trillion at the end of March.