KKR Japan REIT Buying Greater Osaka Shed From Logisteed for $66M

KKR’s Tokyo-listed industrial REIT plans to buy an under-construction warehouse near Osaka for JPY 9.24 billion ($66 million).

Industrial & Infrastructure Fund will acquire the four-storey project in Hyogo prefecture from KKR-owned logistics firm Logisteed, according to a Thursday filing by the trust’s manager, which is also controlled by the Manhattan-based private equity giant.

IIF’s forward purchase of IIF Hyogosanda Logistics Center II is expected to close on 8 January 2025, with the transaction price representing an 8.5 percent discount to appraised value in July. Logisteed will then lease back the facility’s 33,387 square metres (359,375 square feet) for 30.2 years at a rental rate indexed to inflation.

“IIF decided to acquire the anticipated acquisition judging that the characteristics of the property are aligned with IIF’s investment strategies, specifically, the acquisition of quality assets contributing to increasing IIF’s distributions per unit,” the manager said.

Daiwa House Construction

Built by Daiwa House Industry and located at the Techno Park industrial estate in Sanda city, about an hour’s drive northwest of Osaka, IIF Hyogosanda Logistics Center II is expected to finish construction on 29 November of this year.

IFF and Logisteed will jointly promote the facility to occupiers involved in medical-type shipping, according to the filing. The trust’s manager estimates a net operating income of JPY 388 million and an NOI yield of 4.2 percent (3.5 percent after depreciation).

KKR acquired logistics firm Hitachi Transport System in March 2023 and renamed the company Logisteed the following month. Earlier this year, Logisteed sold a portfolio of warehouses spanning 389,603 square metres across Japan to IFF for JPY 108.3 billion ($700 million).

IFF’s $3.5 billion portfolio consists of 108 logistics, manufacturing and infrastructure assets with an overall occupancy rate of 99 percent.

Double-Barrelled Dealmaking

KKR bought IFF’s manager — formerly known as Mitsubishi Corp-UBS Realty, a joint venture of the Japanese conglomerate and the Swiss bank — for $2 billion in 2022 in an all-cash, balance sheet transaction using no client funds.

The renamed KJR Management also oversees the $9.1 billion Japan Metropolitan Fund, which last week announced plans to sell an ageing shopping centre in Yokohama for JPY 9 billion and buy a newly completed Kawasaki mall for JPY 4.8 billion.

JMF’s most recently completed deal was the May purchase of a 70 percent stake in a commercial building on the southern island of Okinawa for JPY 2.5 billion. Last December, the trust nearly doubled its apartment portfolio with the acquisition of an apartment building in Nagoya and a stake in a portfolio of multi-family assets for JPY 3.8 billion in total.