Japan’s Fukuoka REIT Buying Beds and Sheds for $89M, Selling Office Block for $44M

Japan’s Fukuoka REIT is joining the beds-and-sheds trend, with the trust based in Fukuoka prefecture agreeing to the forward purchase of a warehouse project and apartment development on the southern island of Kyushu for a total of JPY 12.9 billion ($89 million) and announcing the sale of an office building for JPY 6.4 billion.

The Tokyo-listed trust is acquiring Mifune Logistics Center, an under-construction complex in Kumamoto prefecture, for JPY 11 billion and Axion Otemon Premium, a 15-storey rental apartment building in central Fukuoka, for JPY 1.1 billion, the REIT’s manager said Wednesday in a release. The logistics deal is scheduled to close on 27 March 2025 and the residential buy on 28 March.

The sellers are two domestic companies whose identities weren’t disclosed. Online sources show that Mifune Logistics Center is a development of Hayashi Warehouse Co.

“Regarding Mifune Logistics Center, FRC believes that the value of logistics facilities in the Kumamoto area will increase further in the future due to the booming of semiconductor industry in the Kyushu region and the ‘2024 problem’ of logistics against the backdrop of rising demand for logistics facilities,” the manager said, referring to this year’s new rules restricting driver work hours.

Five-Warehouse Complex

Located southeast of Kumamoto city, Mifune Logistics Center will consist of five low-rise warehouses with a total leasable area of 39,896 square metres (429,437 square feet). The property is fully pre-leased to four tenants and equipped with solar power generation facilities.

The REIT’s acquisition price for the complex represents a 2.7 percent discount to appraised value and a 4.4 percent acquisition capitalisation rate, the manager said.

Axion Otemon Premium in Fukuoka’s Chuo ward comprises 25 luxury rental units and one retail/office space, and the 2018-vintage building’s 1,937 square metres of leasable space is 80.9 percent occupied. The acquisition price is roughly in line with the appraised value, and the cap rate is 3.5 percent.

In a separate announcement Wednesday, Fukuoka REIT said it had executed a deal to sell the eight-storey Tenjin North Front Building in Fukuoka’s Chuo ward to Orix JREIT. The trust is unloading the 2010-era office block because the agreed sale price far exceeds the appraised value of JPY 5.2 billion.

“Agreement has been reached after discussions with the buyer to carry out the disposition in six phases, allowing for the creation of funds for future dividends,” the manager said.

The latest moves by the REIT sponsored by developer Fukuoka Jisho will bring the portfolio’s assets to JPY 230.1 billion ($1.6 billion) by acquisition price.

Heading South

Kyushu, the third largest of Japan’s main islands, has served as the setting for several big-ticket property deals this year.

In May, Ichigo Office REIT acquired three Fukuoka assets, including the Ichigo Hakata Meiji Dori Building for which the trust paid JPY 3.08 billion. Located in the Gofukucho area near Fukuoka’s central business district, the 2007-era building is occupied by a lighting equipment manufacturer, a financial services company and a pharmaceutical firm.

That same month, Mingtiandi reported that Singapore’s GIC had chosen the SC Capital-sponsored Japan Hotel REIT as the preferred bidder for the Hilton Fukuoka Sea Hawk hotel for a price said to be as much as JPY 70 billion.

Also in May, CBRE revealed that New York-based fund manager Fortress Investment Group was acquiring the Phoenix Seagaia Resort in the city of Miyazaki. The complex includes the 743-key Sheraton Grande Ocean Resort and two smaller hospitality properties.