Kenedix REIT Selling Greater Osaka Mall for $41M

KDX Realty Investment Corporation, the flagship REIT of Japanese fund manager Kenedix, has agreed to sell a Greater Osaka mall for JPY 6 billion ($41.3 million).

Combox Komyoike, located 25 kilometres (15.5 miles) south of central Osaka in the city of Izumi, is changing hands at a 3.8 percent premium to book value, according to a stock filing by KDXR’s manager, which described the buyer as a non-related domestic company.

Combox Komyoike comprises 26,871 square metres (289,237 square feet) of leasable area tenanted to master lessee Daiwa House Realty Management. The 2004-vintage mall enjoys a favourable location in a residential area and excellent access to central Osaka, the manager said.

“However, the property has been classified as a property with concerns regarding future increase in capital expenditure and maintenance costs, as well as potential decline in profitability due to competitive environmental changes of neighbouring properties,” it said.

10-Year Carry Concludes

Located next to Komyoike Station on the Semboku Rapid Railway, Combox Komyoike has 34 stores including a supermarket, a home electronics wholesaler and a Uniqlo fast-fashion outlet.

KDXR precursor Kenedix Retail REIT acquired 93.2 percent of Combox Komyoike’s floor area and site rights in 2015 for JPY 6.5 billion. After KRR merged with two other Kenedix-sponsored J-REITs to form KDXR in 2023, the supersized trust bought out the remaining interest in the mall last July.

The REIT is exiting the investment at the equivalent of JPY 223,289 ($1,533) per square metre of leasable area, with the transaction scheduled to close on 30 June.

“While KDXR is acquiring new properties that are in line with its portfolio management policy, we are also working to improve portfolio quality through asset reshuffling by disposing properties, taking into account the current and future portfolio construction policy, real estate market trends, and the characteristics of individual properties,” the manager said in the filing.

Asset Reshuffling Continues

The latest disposal comes after KDXR earlier this year acquired a warehouse in the southern fringe of Honshu island’s Chubu region for JPY 12.4 billion and divested 13 properties for JPY 18.7 billion as part of a “mutual trading” with sponsor Kenedix.

Upon disposal of Combox Komyoike, the trust’s portfolio will comprise 342 properties with a total acquisition value of JPY 1.19 trillion.

Kenedix earlier this month teamed with its former parent group, US investment manager Kennedy Wilson, and fellow Japanese property player Hulic to acquire a Seattle multi-family property for $173 million.