Daiwa House Selling Chiba Warehouse to J-REIT for $200M

Daiwa House Industry is selling a logistics facility in Greater Tokyo to a TSE-listed REIT sponsored by the Japanese home builder for JPY 30 billion ($200 million).

Daiwa House REIT Investment Corporation is acquiring DPL Urayasu III in Chiba prefecture, east of the capital, at a 3.5 percent cap rate, the trust’s manager said in an investor disclosure on Thursday.

The trust’s manager said in the statement that it “deemed that the acquisition would expand the asset size, further increase the stability of cash flow through increased portfolio diversification and secure stable revenues in the long term”.

Japan’s industrial sector continues to be a popular play for inventors as average monthly rents for logistics space in Greater Tokyo rose to JPY 1398 per square metre the third quarter of last year, up 1.4 percent from the same period a year earlier, according to a report from JLL.

Serving Greater Tokyo

The target of the transaction is a 60,846 square metre shed in Chiba’s Urayasu City. Completed in 2022, the multi-tenant warehouse includes cold storage facilities, has a maximum floor weight of 1.5 tonnes per square metre and all five of its floors are accessible by ramps.

The property is located around 3 kilometres from the nearest interchange on the Metropolitan Expressway Wangan Route, which connects to central Tokyo. The route also links to the National Route 357, which connects Chiba with Kanagawa prefecture south of the capital.

 

The manager expects the warehouse to be fully occupied at the time of the deal’s completion at the beginning of March, with four tenants, including logistics services provider Seino Transportation and industrial machinery distributor Nihon Bisoh.

Daiwa House REIT is acquiring the asset at a slight discount from its appraised value of JPY 31.1 billion at the end of 2023, which is equivalent to JPY 524,151 per square metre of net leasable area.

The trust’s manager plans to finance the deal using cash-on-hand and a JPY 15 billion loan that it will procure on the same day of the acquisition. One third of the borrowings are green loans, which will be used to fund the deal for the warehouse with an A rating in the Comprehensive Assessment System for Built Environment Efficiency (CASBEE).

With the project in line for green financing, Daiwa House will install solar panels on the property’s roof after the deal is completed, the trust’s manager said.

Post-acquisition, Daiwa House REIT’s portfolio will be composed of 233 properties across the logistics, rental residential, retail and hotel sectors, adding up to total assets under management of JPY 935.8 billion based on acquisition price. The trust’s 68 warehouse assets will comprise 53.8 percent of the portfolio’s total investment.

Sheds Stay Hot

Daiwa House’s sale of the Chiba warehouse comes less than two months after the group sold a Vietnamese shed to its SGX-listed REIT for VND 483 billion ($20 million). That year-end transaction, expanded Daiwa House Logistics Trust’s portfolio beyond its home market of Japan for the first time.

This week’s deal maintains an industrial theme to Daiwa House’s activities in recent months after the developer broke ground on a 149,000 square metre logistics project in Tokyo’s Koto ward in January, according to a local report, with that six-storey facility scheduled for completion in March 2026.

In December, Daiwa House sold a pair of logistics facilities –  one each in Greater Osaka and Greater Fukuoka – to GIC for an undisclosed amount. In July, the Japanese group sold a Greater Nagoya warehouse to the sovereign wealth fund for $100 million.

Industrial was second only to retail as the fastest growing segment in Japan’s property market last year, with investors committing JPY 1.1 trillion to the country’s warehouses, workshops and data centres in 2023. This represented a 40 percent increase from a year earlier, according to MSCI Real Assets, while retail deal volume grew by 46 percent.