Japan’s SMFL Mirai Launches $140M Management-Backed Buyout of Logistics Platform CRE

SMFL Mirai Partners has launched its second buyout of a real estate fund manager in less than a year, putting forth a tender offer to privatise Japanese warehouse developer CRE Inc in a JPY 21.7 billion ($140 million) deal.

The fund management arm of Sumitomo Mitsui Finance and Leasing joined forces with CRE founder and chairman Shuhei Yamashita to offer JPY 1,700 each for the issued shares they don’t already own, CRE said Tuesday in documents announcing the company’s support for the takeover. The offer represents a nearly 30 percent premium to CRE’s Monday closing price of JPY 1,309 on the Tokyo Stock Exchange and values the company at close to $300 million.

CRE develops and manages logistics properties and sponsors CRE Logistics REIT, a TSE-listed trust with a portfolio comprising 21 assets with a total acquisition value of JPY 158.9 billion ($1 billion).

“CRE’s position as the sponsor of CRE REIT and the asset manager will remain unchanged as a result of the tender offer, and CRE REIT and the asset manager will aim to increase unitholder value with the broad support of CRE,” the trust’s manager said Wednesday in a release. Coming out in favour of the buyout, CRE recommended that shareholders accept the tender offer.

Management Continuity

Yamashita owns 37.62 percent of CRE’s issued shares through his investment firm Kyobashi Kosan, while SMFL Mirai Partners’ Kenedix unit owns 15.28 percent. Yamashita will continue to invest in CRE and manage the company after the buyout, according to the documents.

For its most recent fiscal year to the end of July 2024, CRE posted net sales of JPY 66.9 billion, up 28.3 percent, and an operating profit of JPY 8 billion, up 12.6 percent. For the nine months to the end of last July, the company reported net sales of JPY 64.3 billion and an operating profit of JPY 8.9 billion. CRE’s assets stood at JPY 156.9 billion at the end of October against liabilities of JPY 116.6 billion.

The management structure of the privatised company, including the composition of the board of directors, will be determined through discussions with Kyobashi Kosan after the completion of the tender offer, CRE said.

The deal comes less than 11 months after SMFL announced its $270 million acquisition of ARA Private Funds from Hong Kong-listed 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.

SMFL Mirai Partners first signalled an interest in industrial real estate with its 2022 acquisition of a warehouse development project north of Osaka with trading group Sumitomo Corporation as a joint venture partner. The four-storey facility, known as Newno Sosila Takatsuki, was completed in 2023 and provides 29,068 square metres (312,885 square feet) of gross floor area, according to Nikkei Real Estate Market Report.

“SMFL has positioned and strengthened its real estate business as one of its core businesses for sustainable growth and enhancement of corporate value,” CRE said.

Takeover Wave

CRE’s takeover is the latest in a recent wave of consolidation and privatisation of Japanese real estate firms, with Hillhouse Investment Management and its Rava Partners unit completing a tender offer last month for Tokyo-listed Samty Holdings in a deal valuing the developer at JPY 169 billion.

In October, property giant Hulic completed the tender offer for its JPY 173.5 billion acquisition of Raysum, with the TSE-listed builder becoming a consolidated Hulic unit. In September, the asset management arm of Goldman Sachs and the founding family of Nihon Housing completed a take-private deal valuing the Tokyo-based property manager at JPY 77 billion.

Japan’s share of all private equity and venture capital investments in Asia Pacific grew in 2024 as the value of private equity deals targeting Japanese companies surged, according to a report by S&P Global.

The value of investment backed by private equity and venture capital in Japan rose 40.8 percent to $17.9 billion in 2024, the data provider said. The amount was equal to 15.6 percent of all private equity and venture capital investments in Asia Pacific in 2024, a share that grew from 10.6 percent in 2023.