ESR Sells Remaining Stake in Japan’s Kenedix to SMFL Mirai Partners

Asian industrial giant ESR has sold its remaining 30 percent stake in Kenedix to SMFL Mirai Partners, giving the unit of Sumitomo Mitsui Finance and Leasing full control of the Japanese real estate fund manager.

No financial details were disclosed, but the deal was agreed upon at terms reflecting the strong underlying value of Kenedix and its platform, ESR said Thursday in a release. Kenedix manages more than JPY 4.6 trillion ($31.4 billion) in assets across a range of listed J-REITs, private REITs and private funds.

The transaction follows ESR’s sale of the ARA Private Funds business to SMFL Mirai and Kenedix last year at an enterprise value of $270 million. In 2020, SMFL Mirai had teamed with ARA Asset Management, before that company’s 2022 acquisition by ESR, to take Tokyo-listed Kenedix private in a $1.3 billion deal.

ESR co-founder and co-CEO Stuart Gibson said the Kenedix divestment enables the Singapore-based developer and asset manager to accelerate its strategic transformation by simplifying the business and recycling capital after ESR’s $7 billion privatisation earlier this year.

“We look forward to seeing the continued growth and success of the Kenedix business under the full ownership of SMFL Group,” Gibson said. “This transaction underscores the synergistic and long-standing relationship between ESR and the broader Sumitomo Mitsui Banking Corporation Group.”

Strengthening Ties

In a separate statement, Kenedix noted that it has been strengthening its strategic cooperation with SMFL Group since the 2021 privatisation, including through the development of real estate products utilising digital technologies like real estate security tokens and the expansion of the Kolet single-family rentals business.

“Taking this additional share acquisition as an opportunity, Kenedix will further strengthen its collaboration with SMFL Group and continue to implement initiatives to maximise corporate value while maintaining the business model and management independence that are the source of the competitiveness of Kenedix Group based on the capital and business alliance agreement,” Kenedix said.

The Japanese firms plan to expand their real-estate-related businesses, including overseas, SMFL Group said in its own notice, with the acquirer pledging to respect Kenedix’s high level of expertise and management autonomy and build a framework to enhance comprehensive customer service and create value.

The deal marks ESR’s latest disposal of ARA legacy assets, after acquiring the remaining interest in Logos Property held by the Aussie developer’s founders in July of last year and spinning off certain Logos properties. Logos came under the ESR umbrella in early 2022 as part of the group’s $5.2 billion takeover of Singapore-based ARA, which had acquired a majority stake in Logos in 2020 for an undisclosed price.

ESR continues to sponsor the former ESR-Logos REIT (renamed ESR REIT last December), the fruit of a 2022-era consolidation with ARA Logos Logistics Trust.

Year of the Buyout

The Kenedix buyout comes after SMFL Mirai acquired industrial builder CRE Inc in March of this year in a JPY 21.7 billion ($140 million) privatisation, with CRE delisting from the Tokyo Stock Exchange in May.

SMFL Mirai had joined forces with CRE founder and chairman Shuhei Yamashita to buy the shares they didn’t already own. Yamashita has continued to invest in CRE and manage the company after the takeover.

CRE develops and manages logistics properties and sponsors CRE Logistics REIT, a TSE-listed trust with a portfolio comprising 21 assets with a total acquisition value of JPY 158.9 billion ($1 billion).