Nissan’s name will stay on its headquarters while KKR collects rent (Image: Nissan)
KKR continues to find avenues for profiting from economic changes roiling Japan’s commercial giants with Nissan announcing late last week that it has sold its global headquarters to a private investment entity for JPY 97 billion ($630 million). Bloomberg reported that the buyer is a vehicle managed by the US private equity firm.
On the same day that it revealed the headquarters sale, Nissan announced that it had lost JPY 222 billion in the six months ended 30 September, on the basis of net income attributable to owners, after achieving net income of JPY 19 billion in the same period a year earlier. The auto titan has yet to forecast its net income for the full year, as it implements its “Re:Nissan” plan to resolve its financial challenges before March 2027.
“As a part of “Re:Nissan” actions aimed to achieve positive operating profitability and free cash flow in the automotive business by fiscal year 2026, the Company has considered optimization of its assets,” Nissan said in a statement to the Tokyo Stock Exchange. “The Company decided to proceed with the sale and leaseback transaction involving its Headquarters (Global Headquarters) and concluded the trust beneficiary rights transfer agreement.”
KKR, which previously led the privatisation of Japanese tech firm Fuji Soft, and has been reported to be in due diligence, along with PAG, to acquire the real estate business of beer maker Sapporo Holdings, has yet to comment on the Nissan deal.
Asset Sale Props Up Finances
Nissan announced to the Tokyo exchange that it expects to book extraordinary income of around JPY 73.9 billion from the headquarters sale, which will help bail out its finances for the fiscal year ending 31 March.
Nissan chief executive officer Ivan Espinosa is leading a self-rescue (Image: Nissan)
“We are also optimizing assets to unlock value for transformation,” Nissan chief executive officer Ivan Espinosa, said in an earnings call soon after the property sale was announced. “A key step is our global headquarters in Yokohama. We will proceed with a sale and leaseback transaction under a twenty year agreement. This ensures Nissan’s continued presence and commitment to Yokohama while ensuring no impact on employees or operations.”
The buyer, MJI Godo Kaisha, is backed by Taiwanese auto parts maker Minth Group and managed by KKR’s KJR Management Japanese property unit, according to Bloomberg. Nissan said that it signed the lease agreement with Mizuho Trust & Banking, with the Japanese service provider said by Bloomberg to be acting as joint asset manager for the property together with KJR Management. Other details of the lease agreement were not provided.
Nissan had moved into the 91,456 square metre (984,424 square foot) Yokohama office building in 2009, with the 22-storey complex also including a 4,000 square metre auto gallery on the first floor. The property occupies a 10,000 square metre site and Nissan is selling the complex for the equivalent of just over JPY 1 million per square metre.
Corporate Restructurings Yield Properties
Nissan’s stock jumped more than 3 percent in the hours after the headquarters sale was announced, before giving back much of those gains by the end of the day. With the company’s models struggling to compete against cheaper Chinese vehicles as well as against its compatriots at Toyota and Honda, Nissan has been cutting jobs while also vowing to dispose of non-core assets.
Selling off underutilised real estate is also behind Sapporo Holdings’ sale of its real estate division, which holds Yebisu Garden Place, a former brewery which the company redeveloped into a complex which includes office and residential towers, retail spaces and the Westin Tokyo Hotel.
“The company is continuing to consider ways to utilise real estate that will contribute to enhancing the group’s future value, as well as the fundamental transformation of the business portfolio,” Sapporo said when it announced the commencement of a sale process for its real estate holdings in September.
PAG and KKR have offered to pay more than $2.6 billion to purchase Sapporo Real Estate, according to a Bloomberg report last month.
KKR took control of Fuji Soft in February after battling Bain Capital for control of that company. In September, Japan Metropolitan Fund, a Tokyo-listed REIT managed by KKR, bought a set of 14 office properties from Fuji Soft for JPY 68.7 billion.
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