This article is from the Australian Property Journal archive
Babcock & Brown Japan Property Trust has booked a solid net profit of $26.9 million for the half-year to December 31, 2006, up 86.8% when compared to $14.2 million in 2005.
The trust has announced a distribution of 5.75¢ per unit for the half year, 1.4% higher than DPU guidance provided at the time of the August 2006 institutional placement and 31.3% higher than the distribution in 2005.
Babcock & Brown Japan Property Management’s managing director Eric Lucas said the strong result was a result of solid leasing performance, an upward revaluation of the portfolio and accretive property acquisitions.
The strong result was also driven by the acquisition of 22 properties. During the six month period to December 2006, the trust completed the acquisition of five retail properties for a combined purchase price of ¥15.0 billion ($A168.4 million).
“The properties acquired during the six month period have been immediately accretive to distributable cash flow per unit and will continue to support distribution growth going forward. Their high weighted average yield of 6.4% means that this accretion has been achieved even with the nine and ten year interest rate swaps which have been put in place to protect the significant yield spread.
“This is BJT’s third consecutive period reporting strong growth in DPU and total property value. We continue to apply a bottom-up investment approach, selecting only those properties which we believe will underpin sustainable earnings growth and thereby improve investor returns. We do not seek portfolio growth for its own sake,” he added.
As at December 31, 2006, the trust held interests in 36 properties in Japan; 14 retail properties, 19 office properties and 3 residential properties, located primarily in the Central and Greater Tokyo area with a value of ¥110.6 billion ($A1.2 billion).
Meanwhile, BJT has further strengthened its team with the appointment of chief operating officer Naoto Ichiki, formerly managing director of JP Morgan Real Estate Structured Finance Asia, and the recruitment of additional acquisition and asset management specialists.
There are now 22 real estate investment/asset management professionals in the Tokyo office, including 21 Japanese nationals.
“The strong Babcock & Brown acquisition team in Japan will continue to pursue a number of attractive investment opportunities over the coming months, taking advantage of the Trust’s significant gearing capacity. We are confident our team will continue to leverage its extensive network built through a long-standing presence in Japan,” Lucas said.
Looking ahead, Lucas said the Japanese property market is large and fragmented and continues to offer great potential for participants with significant market expertise and extensive networks
“This market is experiencing a significant recovery in-line with the broader recovery in the Japanese economy. Despite substantially increased investor interest we continue to acquire quality properties at strong yields.
“The yield spread in Japan remains well above that available internationally. This enhances BJT’s ability to fund further accretive acquisitions,” he concluded.
Australian Property Journal
