This article is from the Australian Property Journal archive
BABCOCK & Brown Japan Property Trust has kicked started the new financial year by paying ¥28 billion ($A295 million) for a four property portfolio.
The portfolio includes two offices in Osaka, a residential tower in Fukuoka and a retail centre in Sapporo.
Acquisition properties
|
Property |
Asset class |
Location |
Purchase Price ¥ billion |
NOI yield1 % |
Occupancy by area % |
|
|
Osaka Ekimae No.4 |
Office |
Osaka |
12.00 |
4.0 |
96% |
|
|
Osaka Ekimae No.3 |
Office |
Osaka |
6.00 |
3.7 |
85% |
|
|
Sekijomachi |
Residential |
Fukuoka |
2.75 |
5.4 |
100% |
|
|
Sapporo Ai |
Retail |
Sapporo |
1.95 |
5.3 |
100% |
|
|
Total |
22.70 |
4.2% |
95% |
|||
Babcock & Brown Japan Property Management Limited’s managing director Eric Lucas said the acquisitions will increase BJT’s portfolio value by 23% to ¥148.6 billion ($1.6 billion).
“We are particularly pleased to be increasing our exposure to office properties in the large Osaka office market.
“The significant economic recovery, very evident in Tokyo to date, has been spreading to large regional cities including Osaka. Land prices in Osaka have increased by 20% in the 12 months to 1 January 2007, rents are showing strong signs of growth and vacancy rates are at their lowest levels in over 10 years,” he added.
Lucas said the offices, Osaka Ekimae No. 4 and No. 3, have the potential to deliver strong net operating income growth as they are significantly under-rented (16% and 8% respectively) and have vacant space for lease up.
“Not only is this transaction immediately accretive but the NOI growth anticipated from the Osaka properties should see the accretion improve over time,” he added.
The residential property Sekijomachi is a seven level building comprising 302 one bedroom apartments designed for student accommodation. It is 100% leased for 15 years to a leading operator of 38 vocational colleges with more than 4,000 students.
And the retail centre is an eight level retail building with three basement floors. It is located in the centre of Sapporo and the basement of the property is directly connected to the subway, Sapporo station and the JR underground pedestrian walkway, benefiting from high foot traffic which supports the retail offering.
Lucas said these acquisitions will be funded predominantly by debt and from a fully underwritten institutional placement of 30 million units, representing 6% of units on issue, which will raise $51.9 million at $1.73.
The transaction is expected to be approximately 5% accretive to distributable cash flow per unit for the year ended December 31 2008. Guidance of not less than 6.33¢ per unit of distributable cash flow is provided for the six month period ended December 31 2007.
“BJT has stepped up its gearing ratio to 57.5% (within BJT’s targeted range of 50-60%) by debt funding approximately 73% of this transaction. Debt continues to be readily accessible to BJT, with lenders remaining supportive of BJT’s strategy and confident about the outlook for the Japanese property market in general.
“BJT’s pipeline of potential investments remains strong beyond this transaction,” Lucas concluded.
BJT shares closed 1 cent higher at $1.79.
Australian Property Journal
