KKR Japan REIT to Sell Two Osaka Malls for $175M

KKR’s Tokyo-listed commercial REIT has agreed to sell a pair of suburban Osaka malls for a total of JPY 25.8 billion ($175 million) as the trust seeks to unload the properties at their point of maximum profitability.

Japan Metropolitan Fund is divesting its 75 percent interest in Aeon Mall Tsurumi Ryokuchi to a non-related domestic company for JPY 19.2 billion, an amount equalling the asset’s appraisal value and representing a 17.7 percent premium to book value, according to a Friday stock filing by the trust’s manager. The REIT previously sold a quarter-stake in the property in September 2023 for JPY 6.4 billion.

JMF is disposing Pivo Izumi Chuo to real estate firm Sanplus for JPY 6.6 billion, a 4.9 percent premium to appraisal value and a 33.4 percent premium to book value, said the manager, which is controlled by Manhattan-based private equity giant KKR. The trust plans to return the entire JPY 4.2 billion gain on the sales to JMF unitholders and use the proceeds from the disposals to acquire more profitable assets.

“JMF aims to enhance total returns and expand the growth cycle using ‘internal growth’ and ‘return of gains on sales’ as drivers,” the manager said.

Selling in the Suburbs

Located in Osaka’s outer Tsurumi ward, the four-storey Aeon Mall Tsurumi Ryokuchi comprises 83,500 square metres (898,787 square feet) of total floor space on a master lease to retail giant Aeon. The 2006-vintage building sits 7 kilometres (4.3 miles) east of central Osaka along Japan’s National Route 479 and several key regional roads.

Pivo Izumi Chuo operates in the city of Izumi just south of Osaka and contains 17,406 square metres of floor space. The 2009-era mall is 100 percent occupied by 21 tenants and sits within a two-minute walk of Izumichuo station on the Semboku Kosoku Tetsudo commuter line.

JMF will complete the sale of a 50 percent interest in Aeon Mall Tsurumi Ryokuchi on 29 August and dispose of the remaining 25 percent stake on 1 April 2026. The closing of the Pivo Izumi Chuo transaction will take place on 2 March 2026.

The disposal gains will be returned to unitholders by continuous returns of at least JPY 300 per unit in each fiscal period until the August 2027 fiscal period, the manager said.

Growing Portfolio

Buyout specialist KKR acquired JMF’s manager in 2022 from Japan’s Mitsubishi Corp and Swiss banking heavyweight UBS in a $2 billion balance sheet transaction using no client funds.

Since then, the JMF portfolio has grown from 128 properties to the current 147 with a total acquisition value of JPY 1.29 trillion. As of February, the assets spanned more than 2.6 million square metres of leasable area with an occupancy rate of 98.4 percent.

JMF’s manager also runs an industrial REIT, Industrial & Infrastructure Fund, with a portfolio of 110 properties acquired for a total of JPY 507.6 billion.