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Ichigo Office REIT Buying Six Properties in Tokyo, Fukuoka for $99M

2024/05/22 by Christopher Caillavet Leave a Comment

The Ichigo Hakata Meiji Dori Building in central Fukuoka (Image: JLL)

Ichigo Office REIT is acquiring three office assets in central Tokyo and three in central Fukuoka for a total of JPY 15.4 billion ($99 million), with the purchase to be funded using proceeds from the recent disposal of two properties.

The TSE-listed trust will buy four of the assets from its sponsor, real estate and infrastructure group Ichigo, for JPY 9.1 billion and the remaining two from an Ichigo-affiliated fund for JPY 6.3 billion, the REIT’s manager said Monday in a release.

After completing the acquisitions on 30 May, Ichigo Office plans to carry out value-add activities at the assets to drive higher NAV per share, tenant satisfaction and earnings growth.

“Ichigo Office has a target of consistently generating total returns to shareholders of greater than 8 percent per annum, and believes that the acquisition of high-quality mid-size office assets with earnings upside and increasing asset values via value-add capex is essential to achieve this target,” the manager said.

Shinagawa Centrepiece

The REIT is picking up the priciest asset in the collection, the Ichigo Gotanda West Building in Tokyo’s Shinagawa ward, from Ichigo Estate for JPY 3.95 billion. Located in the Gotanda commercial district, the 1985-vintage building houses a grocery store on the ground floor and tenants on the upper floors that include a game app maker and a systems developer.

Scott Callon Ichigo

Ichigo chairman Scott Callon

Ichigo Gotanda West comprises a leasable area of 2,735 square metres (29,439 square feet), with the acquisition price translating to JPY 1.4 million ($9,000) per square metre, and offers a net operating income yield of 3.9 percent.

The most expensive Fukuoka asset is the Ichigo Hakata Meiji Dori Building, for which the REIT will pay JPY 3.08 billion to the bridge fund known as GK Kizuna1. 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.

Ichigo Office will pay JPY 912,593 ($5,837) per square metre of leasable area for the Ichigo Hakata Meiji Dori Building, which carries an NOI yield of 5 percent.

The other Tokyo assets to be acquired are the Ichigo Otemachi North Building and the Ichigo Akihabara East Building, while the other Fukuoka assets are the Ichigo Tenjin North Building and the Ichigo Hakata Gion Building.

Net Income Boost

Ichigo Office will fund the acquisitions with the sale of two ageing buildings to undisclosed buyers for a total of JPY 4.5 billion ($29 million).

The REIT completed the JPY 2.4 billion sale of the Ichigo Ofuna Building in Kamakura City of Kanagawa prefecture in April. The trust is due to close on the JPY 2.1 billion sale of the Ichigo Kudan 2 Chome Building in Tokyo’s central Chiyoda ward on 31 October this year.

After the asset sales and acquisitions, Ichigo Office’s portfolio will feature 89 office assets with an acquisition value of JPY 220.1 billion, the manager said.

The latest acquisitions will boost the REIT’s net income forecast for the fiscal six-month period to the end of October by 0.9 percent, according to an earnings revision released Monday.

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Filed Under: Finance Tagged With: daily-sp, Fukuoka, Ichigo Inc, Ichigo Office REIT, Japan, Tokyo

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