CapitaLand acquires office and retail properties in Tokyo for S$620.1 million
CapitaLand Limited, through its wholly owned shopping mall business CapitaLand Mall Asia, has entered into conditional sale and purchase agreements to acquire a portfolio of four income-producing office and retail properties in Japan’s Greater Tokyo Area, at an agreed property price of JPY49.7 billion (S$620.1 million). This acquisition will strengthen CapitaLand’s foothold in Greater Tokyo, the world’s most populous metropolis1 , and increase the Group’s total asset size in Japan to about S$2.5 billion.
The portfolio comprises two office buildings in Yokohama – Yokohama Blue Avenue and Sun Hamada; one office building in Tokyo – Kokugikan Front; and one shopping mall in Saitama – Seiyu & Sundrug. Including transaction costs, the total investment for the portfolio is about JPY51.0 billion (S$636.3 million).
Mr Jason Leow, CEO of CapitaLand Mall Asia and Co-ordinating CEO, Asia of CapitaLand Limited, said, “As the capital of Japan, Tokyo is a key global city and Asia Pacific’s top real estate development and investment market, drawing investors with the country’s economic stability, low borrowing costs and high return prospects. Even as Japan’s total population declines, the population in Greater Tokyo Area has been increasing, reaching nearly 38 million1 people in 2015. This trend is expected to continue, underpinning Greater Tokyo’s economic development with an expanding labour force.
“This latest acquisition will deepen the Group’s presence in Greater Tokyo through assets with stable yields and recurring cash flow. Immediately accretive with upside potential, this acquisition will contribute a net operating income of about S$25.0 million per year, providing CapitaLand with a stable source of income as we continue to expand our business. With a sizeable amount of assets under management, this enlarged portfolio in Greater Tokyo will also advance a long-term business strategy for the Group’s operations in Japan.”
Mr Kek Chee How, Country Head, Japan, CapitaLand Mall Asia, said, “The long-term forecast of Greater Tokyo’s office market remains positive, with vacancies in central Tokyo expected to stay below 5%2 through to 2025. As the three office buildings we are acquiring are stabilised assets located in areas with limited new supply, we are confident they will continue to generate stable recurring income.
“On the retail front, our acquisition of Seiyu & Sundrug, a popular destination among locals in Saitama Prefecture for necessity shopping, is a welcome complement to our existing shopping mall portfolio. With a gross floor area (GFA) of close to 400,000 square feet, Seiyu & Sundrug will grow CapitaLand’s retail footprint in Japan by about 25% to over 2 million square feet in GFA.”
The acquisition will be financed by a combination of internal funds and borrowings, and is expected to be completed in the first quarter of this year. Please refer to the Annex for more information on each of the four properties.
CapitaLand currently owns and manages four shopping malls in Japan – namely Olinas Mall, Vivit Minami-Funabashi and La Park Mizue in Tokyo; as well as Coop Kobe NishinomiyaHigashi in Kobe. Through its wholly owned serviced residence arm, The Ascott Limited, CapitaLand owns and manages 46 properties with more than 3,500 apartment units in Japan. The Group’s Japan portfolio also includes a 20% stake in an office building – the Shinjuku Front Tower.