Kenedix REIT Buying Central Japan Shed for $81M, Unloading Assets in Trade With Sponsor

The flagship REIT of Japanese fund manager Kenedix is acquiring a warehouse in the southern fringe of Honshu island’s Chubu region for JPY 12.4 billion ($81 million) and divesting 13 properties for JPY 18.7 billion as part of a “mutual trading” with the trust’s sponsor.

KDX Realty Investment Corporation is picking up the newly built shed in Shizuoka from Kenedix at a net property income yield of 4.4 percent, KDXR’s manager said in a filing. The fully occupied facility provides 45,623 square metres (491,082 square feet) of leasable area and will be renamed KDX Logistics Ondabara.

The trust in turn is selling two office buildings and 10 residential properties across Japan to Kenedix affiliates for a total of JPY 12.2 billion. KDXR also announced plans to sell Resora Obu Shopping Terrace, a neighbourhood mall in the Chubu region’s Aichi prefecture, to an unidentified domestic company for JPY 6.5 billion.

The warehouse, mall and office transactions are to be completed on 31 January 2025, with the residential deals expected to close on 30 April. The flurry of activity represents the latest reshuffle for KDXR, which was formed last year from the merger of three Kenedix-sponsored J-REITs into a single trust with assets under management totalling more than $8 billion.

“KDXR intends to continue to implement strategic and continuous transactions in the future,” the manager said.

Anchored by Logisteed

KDX Logistics Ondabara lies near the Tomei Expressway and is occupied by three tenants, including KKR-owned logistics operator Logisteed. KDXR’s acquisition price translates to JPY 271,793 ($1,766) per square metre of leasable area.

“The property is located in Shizuoka city where the population is concentrated with excellent location conditions as a regional distribution base, and the new supply of large-scale logistics facilities is limited,” the manager said. “We believe that potential upside can be expected through future rent increase at the time of rent renewal.”

Resora Obu Shopping Terrace, meanwhile, opened in 2008 as part of a development project also featuring a medical mall and a condo complex. The 19,909 square metre retail asset is being offloaded at a 1.4 percent premium to book value.

“We have been considering to dispose of the property since there was a concern of the decline in profitability due to an increase in capital expenditure and repair costs in the future,” the manager said.

Hotel Mega-Deal

KDXR’s trading with its sponsor comes less than two months after Kenedix announced a joint venture with US fund manager TPG Angelo Gordon to acquire the Grand Nikko Tokyo Daiba from Japanese builder Hulic.

Market sources who spoke to Mingtiandi put the price at JPY 106 billion ($691 million), which would make it Asia Pacific’s biggest hotel transaction of 2024. The deal was due to close by 29 November.

At the reported compensation, TPG Angelo Gordon and Kenedix are paying the equivalent of JPY 129 million per key for the 122,755 square metre property, which was renovated just before the COVID-19 pandemic, according to Dan Voellm of hotel consultancy AP Hospitality Advisors.