ESR-Logos REIT to Purchase Greater Tokyo ESR Facility
ESR-Logos REIT has agreed to buy a Greater Tokyo logistics asset for 183.5 million Singapore dollars ($131.4 million), marking the Singapore-listed trust’s first acquisition in Japan.
The trust’s sponsor, Hong Kong-listed ESR Group, will acquire the ESR Sakura distribution center in Chiba prefecture from a fund under its management and in turn sell the asset to ESR-Logos REIT, it said. the trust manager said Monday. in a version.
The facility will be the first direct asset acquisition from ESR’s logistics asset pipeline since the May completion of the S$1.4 billion merger of ESR-REIT and ARA Logos Logistics. Trust, which provided the Consolidated Trust with expanded access to ESR’s $149 billion in assets around the region.
“We are delighted to expand the REIT’s footprint in Japan, our second largest overseas market, with the acquisition of ESR Sakura DC, a wholly owned asset that will build on strong logistics growth trends in Greater Tokyo Area,” said Adrian Chui, Managing Director. and executive director of the manager.
Close to transportation hubs
Located in Sakura City, between Narita International Airport and the Port of Chiba, the 2015 ESR Sakura Distribution Center is a five-story facility accessible by ramps and 11 freight elevators. Green features include rooftop solar panels and LED lighting.
The REIT’s consideration for the warehouse is equivalent to S$2,251 ($16,121) per square meter of NLA for a net land revenue return of 4.35% (including rental support).
The property’s four tenants include gaming machine maker Universal Entertainment and warehousing contractor Sanzen Logistics Solution, and the weighted average term to lease expiration is 2.9 years.
Speaking at a Mingtiandi forum in May, ESR-Logos REIT Deputy Managing Director Karen Lee noted the opportunity for ESR-Logos REIT to gain access to its sponsor’s portfolio as one of the main advantages of the trust after the merger.
As a “interested party transaction”, the transaction will require unitholder approval at an extraordinary general meeting to complete. To mitigate rental risks associated with the acquisition, the sponsor is guaranteeing one year’s rent at S$2.4 million each month from the 81,507 square meter (877,334 sq ft) facility, which is currently 25% vacant.
ESR-Logos REIT holds interests in assets valued at S$5.5 billion. The portfolio includes 62 assets in Singapore and 21 assets in Australia with a total gross floor area of 2.3 million square meters, as well as investments in three property funds in Australia.
Most recently, the trust sold its Pandan Logistics Hub in Singapore’s Jurong East to ST Logistics for S$43.5 million ($32 million) in a deal announced in late July.
Evolving Japanese market
The director of ESR-Logos REIT described Japan as a large and evolving growth market for logistics assets, most of which are located on freehold land, as opposed to common short-term land leases in Singapore, Beijing and Shanghai.
Sponsor ESR revealed in June that construction had been completed on the first phase of the group’s Yokohama Sachiura Logistics Park, which is expected to be Japan’s most valuable complex of its kind when completed.
ESR Yokohama Sachiura Distribution Center 1 is a four-story double ramp warehouse with a gross floor area of 195,342 square meters. The four-phase logistics park will provide 720,000 square meters of logistics space and have a total completed value of $2.5 billion.
Speaking at MTD TV’s Japan Logistics Investment Panel in May, APG Asset Management Director Brian Hung said the country’s logistics market had generally outperformed most of its Asia-Pacific peers. and would likely continue to take the lead given a relatively stable environment and healthy e-commerce. sector.