Rubicon Japan Trust has super sized its portfolio with the purchase of a four Japanese commercial and retail assets for ?45 billion ($A477 million).
The four property portfolio encompasses 43,612 sqm of net lettable area and has been acquired on a yield of 4.74% and at a 4.6% discount to valuation.
RJT has bought the Kawasaki Tech Center, an A-Class 20-level office building located in Greater Tokyo. The property is 92.1% occupied by a variety of quality tenants including Siemens, Hitachi Build System, Motorola Japan and Mitsubishi Fuso Engineering. The second office asset is a seven level building located in Nagoya City. The property is 100% leased to Central Finance, a finance company listed on the Tokyo and Nagoya Stock Exchanges.
The third asset is Norbesa, a seven level retail complex located in Sapporo, Hokkaido in the northern most of the four main islands of Japan. RJT has also acquired a single storey retail complex located in Kumamoto City, Kyushu, the southern most of the four main islands of Japan. The building is anchored by Marushoku, a regional supermarket chain operating approximately 90 stores throughout Kyushu
Rubicon Asset Management’s managing director Gordon Fell said the transaction will deliver improved scale, diversification and income security for RJT, while significantly increasing distributions to unitholders by almost 10% since IPO.
“While maintaining a strong focus on Tokyo office, we have been able to diversify to major regional cities such as Nagoya and Sapporo that are also enjoying population growth. At the same time, we have been able to upgrade the quality of the portfolio with key assets which we are delighted to have secured.
“Importantly, following completion of the equity raising, the balance sheet capacity of RJT will be enhanced and RJT will have capacity for an additional $A250 million in debt funded acquisitions which should provide further upgrades to distributions,” Dr Fell said.
Following the transaction, the number of properties in RJT’s portfolio will increase to 14 with a total area of 72,316 sqm, diversified over 252 tenants.
The value of the trust’s portfolio will also increase to ¥73.5 billion ($A778.19 million).
The transaction is expected to deliver significant financial and portfolio benefits to RJT’s unitholders including a distribution upgrade to 9.62 cents per unit for the year ending 2008 financial year – an increase of 9.9% on the PDS forecast for RJT’s initial public offering in October 2006.
RJT has also upgraded its NTA to $1.00 per unit – an increase of 6.4%.
RJT will issue approximately 232.7 million of new units to raise approximately $241 million by way of a 1 for 1 non-renounceable pro rata rights offer of approximately 179 million units at a fixed price of $1.03 per new unit to existing eligible unitholders and an institutional placement of approximately 53.7 million units at a price to be determined by way of a bookbuild.
The proceeds of the equity raising, together with debt, will be applied to fund the transaction and the costs associated with the transaction.
Credit Suisse (Australia) Limited and Deutsche Bank AG have been appointed as Joint Lead Managers and have fully underwritten the rights offer and institutional placement.
Gearing will increase from 45.1% at IPO to 48.6%, but remains below target gearing of between 50-60%, allowing for additional debt funded earnings accretive acquisitions.
Australian Property Journal
