Hankyu Hanshin REIT Buying Greater Osaka Mall for $77M in Portfolio Rejig

Hankyu Hanshin REIT has decided to buy a mall near Osaka for JPY 11.5 billion ($77 million), as the Tokyo-listed trust carries out an asset replacement scheme aimed at overhauling 10 percent of its portfolio.

HHR is acquiring Aeon Mall Inagawa, located 30 kilometres (18.6 miles) north of central Osaka in Hyogo prefecture, for just under its appraised value of JPY 11.6 billion, according to a Wednesday stock filing. The seller of the 62,101 square metre (668,450 square foot) complex was described as a non-related domestic corporation.

HHR’s manager said the REIT was drawn to the mall’s net operating income yield of 5.5 percent and proximity to Nissei Chuo station on the Nose Electric Railway, a local line operated by the parent group of the trust’s sponsor, Hankyu Hanshin Properties. The property also sits within a 15-minute drive of three planned communities populated with young families.

“We have determined that it has a highly competitive position in the local market,” the manager said.

Aeon Master Lease

Aeon Mall Inagawa is comprehensively leased to retailing giant Aeon and features an anchor store, supermarket and specialty stores. HHR’s consideration of JPY 11.5 billion is equivalent to JPY 185,182 ($1,246) per square metre of leasable area.

The deal follows last week’s announcement that HHR would acquire a community retail asset, Friend Mart Ibaraki Hirata Store, in the Ibaraki prefecture city of Hirata for JPY 2.4 billion and sell a Tokyo office block, the Shiodome East Side Building, for JPY 16.8 billion. Proceeds from the disposal of the property in the capital’s Minato ward will help fund the acquisition of Aeon Mall Inagawa.

“As far as the profit from selling the asset is concerned, HHR will reserve part of it internally to drive sustainable growth or use it to advance a payment for expenses in future fiscal periods while returning part of it to unitholders,” the manager said in a supplemental presentation.

Upon completion of the three transactions during the first half of 2024, HHR’s portfolio will comprise properties with a total acquisition value of JPY 174.9 billion ($1.2 billion).

Neutral Stance on 3D Tender

Also Wednesday, HHR announced that it would take a neutral position on a tender offer made by fund manager 3D Investment Partners.

Singapore-based 3D offered last month to acquire between 10 and 15 percent of the issued investment units of HHR. The tender offer was extended without any prior consultation with HHR.

The trust’s manager said Wednesday that at the present time “it cannot be determined that 3D’s ownership of investment units could prevent HHR from securing and enhancing unitholder value over the medium-to-long-term.”