Japan’s Ichigo Office REIT Picks Up Two Fukuoka Office Buildings for $48M

Japanese property and infrastructure firm Ichigo Inc. is reshuffling its actual property portfolio, with one among its sponsored funds promoting two workplace buildings to a Tokyo Stock Exchange-listed REIT beneath its administration for a complete of JPY 6.25 billion ($48 million).

Ichigo Office REIT Investment Corporation is shopping for the mid-size properties, which span a complete leasable space of 6,546 sq. metres (70,461 sq. toes) within the central enterprise district of Fukuoka, the capital of Fukuoka Prefecture. The REIT is managed by Ichigo Investment Advisors, a subsidiary of Tokyo-based Ichigo.

“As a specialized office REIT that delivers robust earnings stability via a diversified portfolio, Ichigo Office continues to execute on its strategy to grow shareholder value by focusing its portfolio on high-quality, mid-size office assets,” Ichigo Office REIT stated in a submitting on Tuesday, including that the newly bought property have earnings development upside.

The acquisition consists of Ichigo Hakataeki Higashi Building, which is altering arms for JPY 3.5 billion, and Fukuoka Kensetsu Kaikan, which is being bought for JPY 2.75 billion, representing a worth per sq. metre of JPY 973,112 and JPY 932,450, respectively. The vendor, the Ichigo Office Bridge Fund, bought the property in January of final 12 months.

Income Boost

The acquisition will increase the REIT’s portfolio to 84 workplace property and is predicted to extend its annual web working revenue by about JPY 113 million, the belief stated. Ichigo Office REIT plans to hold out value-add enhancements to the pair of properties.

Ichigo Office Bridge Fund acquired the buildings, along with two others – one in Fukuoka and one in Tokyo – in January 2022, with Ichigo Office REIT concurrently investing JPY 50 million to purchase a 0.94 p.c fairness curiosity within the fund. Through the deal, the REIT obtained preferential negotiation rights to amass the bridge fund’s 4 underlying property.

The two buildings now being acquired by the REIT are situated roughly 600 metres aside in a bustling downtown space east of Hakata Station, Fukuoka’s principal transit hub that connects the town on the northern shore of Kyushu Island to the remainder of Japan.

Located at 1-13-9 Hakataeki Higashi in Hakata Ward, Ichigo Hakataeki Higashi Building was in-built 1987 and was 96.8 p.c occupied by 32 tenants on the finish of final 12 months. The eight-storey constructing has a leasable space of three,597 sq. metres. The property sits alongside Nakahie Park Street, a significant thoroughfare, lower than a block away from Hakata Station.

Fukuoka Kensetsu Kaikan is only a 10-minute stroll to the southeast at 3-14-18 Hakataeki Higashi. Built in 1997, the nine-storey constructing spans 2,949 sq. metres and was one hundred pc occupied by 11 tenants on the finish of 2022. The metropolis of Fukuoka has partial rights to about 96 sq. metres of the land for the needs of constructing a high-speed rail facility, the REIT famous.

Current tenants of the 2 buildings run the gamut from building and actual property companies to IT firms and a medical clinic.

Mid-Sized Appeal

Ichigo Office REIT makes a speciality of value-add funding in mid-size workplace property, that are seen to offer steady cashflow and upside for shareholders. The REIT argues on its web site that Japan is exhibiting indicators of rising from many years of deflation, a development that would increase rental revenue.

The belief’s portfolio of 86 property as of year-end 2022 is concentrated within the Tokyo metropolitan space and was assembled at a complete acquisition worth of JPY 206 billion. Following a strategic portfolio restructuring that features the latest purchases in Fukuoka, the REIT expects to have an annual web working revenue of JPY 11.24 billion.

As a part of the identical restructuring, Ichigo Office REIT bought Tokyo’s Ichigo Ikenohata Building in October and the next month purchased the Ichigo Marunouchi South Building in Nagoya. The REIT stated it’s utilizing the proceeds from its sale of the Ichigo Ikenohata Building to amass the Fukuoka property.

Chaired by American investor Scott Callon, Tokyo Stock Exchange-listed Ichigo give attention to sustainable actual property, asset administration, and clear power. Callon additionally serves as chief government of Ichigo Asset Management, which manages billions of {dollars} invested primarily on behalf of US and European charities and endowments.