Valad Property Group has joined the growing number of Aussie LPTs making their way into Japan in search of real estate opportunities.
Yesterday, Valad announced that Guy Farrands will step down from his role as chief executive officer and take up a post in Japan.
“The board has asked Guy Farrands to relinquish the role of Chief Executive Officer,” Valad’s executive chairman Stephen Day said.
Farrands in his new role as president of Japan Operations will report directly to the Day.
Australian Property Journal has learnt that a number of Japanese companies have been impressed with Valad’s performance by following the group’s progress in Australia and as many of four to five companies have approached the group.
Whilst Valad has not provided further details of the Japanese expansion strategy, it is believed that the group is investigating a number of opportunities including a partnership or joint venture with a Japanese company or even the listing of a third party entity on the Australian Stock Exchange.
Valad has a market capitalisation of more than $1 billion and assets under management of over $2.2 billion, and an additional $1.1 billion in end-value preferred equity joint venture projects.
“Guy has been a great contributor to the success of Valad since joining soon after our IPO in 2002 in his role as head of corporate development and more recently in his role as CEO. His dynamic contribution strategically, intellectually, and as a leader, has made an important contribution to the success of Valad which has achieved a total return of 22%pa in the four years since IPO and 28% in the last 12 months.
“Guy will continue with his focus on possible transactions in Japan until March 2007 when this will be reviewed in light of the group’s needs at that time. Valad and in particular Guy has been spending a considerable amount of time in Japan assessing a number of key business opportunities,” he added.
“We are confident we will establish some business lines in Japan in the short to medium term, however we will continue to apply Valad’s rigorous approach to all opportunities,” Day said.
Goldman Sachs JBWere’s James Cornell said focus will likely sharpen on the group’s intended foray into Japan.
“Although with plans vague at this stage and competitive pressures increasing throughout the region, no upside has been incorporated into our forecasts. We note that whilst Australian REITs have historically acquired assets on balance sheet to initiate overseas expansion plans, the diversity of the VPG business model arguably provides for greater flexibility and/or incentive to build a business over time with the use of a mix of its own and 3rd party capital.
“We would view the establishment of a joint venture or the purchase of an operating platform on a reasonable multiple more favourably than a heavily structured portfolio acquisition at a time when multiple parties are chasing spread investing opportunities,” Cornell concluded.
In recent times, rafts of Aussie LPTs have launched or are looking into opportunities in Japan, including the recent listing of the Rubicon Japan Trust.
Galileo Funds Management is also investigating opportunities in Japan and Mariner Financial has signed an agreement with Japan based AXA Real Estate Investment Managers.
Last week, Macquarie Bank and its partner Macquarie Global Property Advisors closed the MGP Japan Core Plus Fund over subscribed by more than $US300 million – raising $US865 million ($A1.3 billion).
Meanwhile, the Babcock & Brown Japan Property Trust which listed in April 2005 with $570 million worth of assets, currently holds interests in a portfolio comprising 36 office, retail and residential properties and has a market cap of $950 million.
By Nelson Yap
