CRE Logistics REIT Selling 40% Stake in Greater Tokyo Shed to SMFL Mirai for $51M

CRE Logistics REIT has agreed to sell a 40 percent interest in a Greater Tokyo warehouse for JPY 7.6 billion ($51.1 million), with the TSE-listed trust planning to use part of the proceeds to buy land for a future project.

CRE REIT will offload the stake in LogiSquare Sayama Hidaka, located north of the capital in Saitama prefecture, through a three-phase sale process concluding in 2027, according to a stock filing. In turn, the trust will acquire the Kanagawa prefecture land for JPY 5.4 billion with an industrial facility on the site leased to a manufacturer.

The counterparty in both transactions is SMFL Mirai Partners, the parent firm of the REIT’s sponsor, industrial developer CRE Inc. The trust’s manager said the Kanagawa land can be redeveloped after the expiry of the fixed-term land lease contract, offering growth potential.

“The asset for sale has relatively low NOI yield and NOI yield after depreciation compared to other properties in the portfolio, and the property replacement is expected to improve the profitability of the portfolio,” the manager said.

Tollway Access

Completed in May 2020, LogiSquare Sayama Hidaka comprises 71,211 square metres (766,509 square feet) of leasable area across four floors with a cafeteria on the fifth floor. The 96.4 percent-occupied shed hosts eight tenants and sits near the Sayama Hidaka Interchange on the Ken-O Expressway, a toll road encircling Greater Tokyo.

CRE REIT acquired an 80 percent stake in the warehouse in 2021 for JPY 14 billion and the remaining 20 percent in 2022 for JPY 3.6 billion. The agreed price for the disposal stake values LogiSquare Sayama Hidaka at JPY 19 billion ($127.8 million) and translates to JPY 266,813 ($1,794) per square metre of leasable area.

The deal will close in three tranches on 30 June 2026, 25 December 2026 and 30 June 2027, with the sale expected to yield a gain of JPY 839 million, the manager said. The acquisition of the Kanagawa land will occur in two stages on 9 January 2026 and 1 July 2026, carrying a net operating income yield of 4.5 percent.

CRE REIT’s portfolio consists of interests in 20 logistics properties with a total floor area of 614 million square metres and a total acquisition value of JPY 157.4 billion ($1.06 billion).

Life After Privatisation

The property swap comes after SMFL Mirai Partners acquired 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.

That deal followed parent group Sumitomo Mitsui Finance and Leasing’s $270 million acquisition of ARA Private Funds less than a year earlier from industrial giant ESR. Those funds primarily own assets in the traditional property sectors of office, retail and hospitality, with the Singapore-based business having since been relaunched as ARAVest.

In 2020, SMFL Mirai Partners had teamed up with ARA Asset Management, before that company’s 2022 acquisition by ESR, to take private Tokyo-listed fund manager Kenedix in a JPY 132 billion deal.