MI-REIT – BT

MI-Reit pays $29.2m for Japanese warehouse

It sees 20 per cent of portfolio in Japan, partner APJ will help manage, find assets

MACARTHURCOOK Industrial Reit (MI-Reit) is making its maiden foray into Japan, after purchasing a property there and forging an alliance with a Japanese asset management firm.

MI-Reit said that it will pay $29.2 million for the Asahi Ohmiya warehouse. The property was recently valued at this amount by independent property valuer CB Richard Ellis.

Located in Saitama, the property is a purpose-built, four-level warehouse with an ancillary three-storey office building, currently used as a distribution centre for pharmaceutical products.
MI-Reit also formed an alliance with Atlas Partners Japan (APJ), to which it will outsource the asset management of the property acquired.

APJ is a specialist in Japanese real estate fund and asset management for global institutional investors and its assets under management are worth more than US$740 million as at Oct 31.

In return, APJ will source for acquisition opportunities and provide asset management support for other properties acquired in Japan.

MI-Reit said that the Japanese real estate market will now be its ‘second most important market outside of Singapore’, even though it will continue to focus on growth within the Singapore market.

Over time, it expects 20 per cent of its portfolio to be located in Japan, while Singapore assets will take up 50 per cent. The rest is expected to be spread across other major Asian industrial property markets.

MI-Reit expects the acquisition to be completed next month, adding that it will be accretive to the trust’s distribution per unit (DPU).

The pro forma financial effects include an additional 0.06 cents per unit – representing a 0.79 per cent rise from the forecast FY08 DPU of 7.41 Singapore cents per unit, plus another 0.06 cents per unit in FY09, or a 0.75 per cent increase from the forecast DPU of 7.59 cents.

The property will also contribute to the trust income’s stability through enhanced tenancy and property diversification.

Exposure to MI-Reit’s largest tenant, UE Tech Park, is reduced from 31.6 per cent to 29.8 per cent of portfolio income.

MI-Reit intends to finance the acquisition wholly with debt, given the relative lower cost of borrowing in Japanese yen.

The acquisition is expected to increase MI-Reit’s gearing level from 33 per cent to 36.7 per cent.