Singapore's Keppel REIT

Singapore’s Keppel REIT Buys Tokyo Office Bldg

JAPAN – Keppel REIT, a real estate investment trust (REIT) listed in Singapore, revealed that it has entered into a deal to acquire a 98.47 percent stake in Ginza 2-chome, a freehold boutique office property in Tokyo, Japan, while the remaining interest will be owned by Keppel Capital Japan Ltd, according to a Singapore Exchange (SGX) filing released on late Friday afternoon (28 October, SGT).

Given that the entire commercial property is valued at JPY8.97 billion (about S$85.7 million), Keppel REIT will pay JPY8.83 billion (around S$84.4 million) for its stake.

“This strategic acquisition of Ginza 2-chome in Tokyo marks Keppel REIT’s entry into Japan, the
world’s third largest economy and Asia’s largest developed market,” said Koh Wee Lih, CEO of Keppel REIT’s manager

“The well-located freehold asset in Tokyo’s prime Ginza district will enhance the visibility of Keppel REIT in the Japanese market and pave the way for the REIT’s future expansion in the well-established and scalable investment grade office market in Japan,” he added.

Ginza 2-chome consists of a retail unit on the ground level and eight floors of office space, with a combined net leasable area (NLA) of around 36,889 sq ft. The well-maintained office tower was completed in 2008.

The commercial property is situated in the Ginza district within the Chuo ward, one of the 3 core wards of Tokyo and home to major Japanese firms, including Bank of Japan & the Tokyo Stock Exchange. It is also a short walk to four metro stations, with the nearest being the Shintomicho Station.

Ginza 2-chome has an A rating under the Comprehensive Assessment System for Built Environment Efficiency (CASBEE), one of Japan’s more widely adopted sustainability certifications.

The office property’s anchor tenant is Netyear Group Corporation, a unit of NTT Data Corporation, with a weighted average lease expiry (WALE) of 3.4 years as of 28 October 2022. While the commercial property has an occupancy rate of merely 36.3 percent, this gives Keppel REIT an opportunity to lease the remaining office space upon completion of the deal, which is expected to close by the end of November 2022.

Post-acquisition, Keppel REIT’s assets under management (AUM) will hit S$9.0 billion across 12 properties in Singapore (77.8 percent of AUM), while Australia, South Korea, and Japan will respectively account for 18 percent, 3.2 percent, and 1 percent. The REIT’s proportion of freehold properties in its portfolio will also rise from 30.1 percent to 30.7 percent in terms of NLA.

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