Hulic REIT Acquiring Tokyo Hotel, Office Building From Sponsor in $45M Deal

TSE-listed Hulic REIT has agreed to buy a hotel in Tokyo’s Roppongi district and an office building in the capital’s Honkomagome area for JPY 6.88 billion ($45 million) from the trust’s sponsor Hulic. 

The Japanese REIT said in a statement late last week that it will acquire the remaining 50 percent stake it does not already own in Sotetsu Fresa Inn Tokyo-Roppongi for $32 million. The same release revealed that the trust will purchase 90 percent usage rights to the Hulic Komagome Building for $13 million.

The double acquisition is Hulic REIT’s latest portfolio expansion in Tokyo after it bought a 90 percent quasi co-ownership in the office tower and retail podium of the Hulic Kobunacho Building from Fuyo General Lease Co for $77 million in June. In a separate transaction last March, the REIT bought two nursing homes in the capital from its sponsor for $36 million.

“The purpose of acquiring the properties is to improve the portfolio in accordance with the basic policies of Hulic REIT,” the trust’s manager said.

Beds and a Bank Office

Hulic REIT’s latest acquisitions, which are expected to be finalised by the start of December, will add the four-storey Hulic Komagome Building in Bunkyo ward to its Tokyo office footprint. Completed in 2012, the workspace has a floor area of 1,426 square metres (15,339 square feet) and is fully leased to Mizuho Bank. 

The 11-storey Sotetsu Fresa Inn Tokyo-Roppongi is a 2017-vintage hospitality asset in Minato ward with 201 guest rooms and a total floor area of 4,758 square metres. 

Hulic REIT said the hotel’s location in Roppongi helps it capture business travellers and tourists. In a separate release documenting the transaction, the trust pointed out that the number of foreign visitors to Japan in September 2023 exceeded 2 million people, bringing tourism back to around 90 percent of the level seen in the same month of 2019. 

Once the deal is complete, Hulic REIT will have 66 assets under management worth $2.6 billion (based on price at the time of acquisition). 

As of Friday, unit prices for Hulic REIT traded at JPY 150,800 ($1,020), down 1.6 percent from their value at the closing period on the day of the release. 

Industrial Focus

Aside from the sale of its office and hotel assets, Hulic has focused on industrial properties in the past year. 

On 9 November the developer announced the completion of its 33,795 square metre Hulic Logistics Noda I in Chiba prefecture’s Noda city, according to a local news report. 

In March, Hulic teamed up with Singapore’s Digital Edge in a plan to develop a data centre in downtown Tokyo, expecting the co-location facility to be operational by 2025. 

“Recently, we have been focusing on developing logistics centres to meet rapidly growing demand and as an alternative strategy for us, since we are reducing the percentage of office space in our portfolio,” Hulic chairman Saburo Nishiura said in the company’s annual report. He added that, “We also plan to build data centres that are not large but have the advantage of being close to central Tokyo.”

Despite its growing preference for industrial assets, the company still made a large play in the office sector as it led a consortium to outbid Brookfield and LaSalle Investment Management for a Tokyo office building. With a $2.7 billion bid, Hulic’s team won a tender last November to obtain a tower in the Otemachi Place complex.