Photo: Mapletree North Asia Commercial Trust
Mapletree North Asia Commercial Trust (MNACT) is acquiring an effective interest of 98.47% in a freehold single-tenanted office building located in Tokyo for an agreed property value of JPY38.8 billion ($474.7 million).
The building, located at 2-1, Ojima 2-chome, Koto-ku, Tokyo, has a gross floor area of 42,496 square metres and is being purchased from vendor Hulic Co.
It is currently entirely leased to Hewlett-Packard Japan with a balance lease term of 8.8 years and serves as its headquarters.
Post-acquisition, the REIT’s assets under management (AUM) will increase by 6% from $7.9 billion to $8.4 billion. Japan’s contribution to AUM will increase from 16.6% to 21.3%, while by net property income (NPI), Japan’s contribution will increase from 22.4% to 26.7%.
The agreed property value of JPY38.8 billion (approximately S$474.7 million) represents a discount of approximately 4.4% to the independent valuation of the property. According to the manager of the REIT, this implies an attractive NPI yield spread (based on NPI yield of 3.6%), when compared against the Japan 10-year government bond yield.
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The total acquisition cost, inclusive of the acquisition fee payable to the manager of $4.7 million and professional fees and other expenses of $18.4 million, amounts to $490.6 million, subject to net working capital adjustments post-completion.
It will be funded through a combination of debt financing and the issuance of perpetual securities.
Completion is expected to take place by June 30.
Cindy Chow, CEO of the manager, says the acquisition is in line with the manager’s strategy to diversify the portfolio’s income stream. “This is an attractive opportunity to acquire a freehold, high-quality and sizeable property, located at the fringe of central Tokyo, at an attractive yield spread that is expected to be DPU-accretive,” she says.
Units in MNACT closed 1 cent or 0.98% higher at $1.03 on May 28.
