Keppel REIT is acquiring a 98.47% stake in a freehold Tokyo office asset known as Ginza 2-chome.
The remaining 1.53% effective interest in the asset, which is about 36% occupied, will be held by Keppel Capital Japan.
The total purchase consideration for the property is JPY8.97 billion, and Keppel REIT will be liable to pay JPY8.83 billion (SGD84.4 million) for its stake.
Completed in 2008, Ginza 2-chome comprises eight storeys of office space and a retail unit on the ground floor.
It features a total net lettable area (NLA) of 3,427 square metres and is located in the Ginza district within the Chuo ward, which is home to major Japanese corporations, the Bank of Japan and the Tokyo Stock Exchange.
The asset is within walking distance to four metro stations, with the nearest being a two-minute walk to Shintomicho Station on the Tokyo Metro Yurakucho Line, said Keppel REIT.
The property is currently anchored by Netyear Group Corporation, a subsidiary of NTT Data Corporation, with a weighted average lease expiry (WALE) of 3.4 years as at 28 October 2022.
“In line with our active portfolio management strategy, we believe this quality addition will strengthen our geographical and income diversification, provide greater stability and enhance Keppel REIT’s overall portfolio returns”, said Koh Wee Lih, CEO of Keppel REIT’s manager.
“In addition, 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.
The acquisition will be funded entirely with Japanese Yen denominated borrowings, and Keppel REIT’s aggregate leverage would be approximately 39% on the transaction completes.
Keppel REIT was last done on the Singapore Exchange at SGD0.92, which presently implies a distribution yield of 6.46% according to data on the Singapore REITs table.