BABCOCK Brown Japan Property Trust has paid ¥19.83 billion ($A204 million) for an office and residential property.
The purchases include the JN office building for ¥12 billion on a yield of 4.43% and Tosabori, a residential building for ¥7.83 billion on a yield of 5.23%.
JN is a newly constructed 14 level office building in the CBD of Yokohama. It is 100% occupied with tenants including HSBC.
The Tosabori residential building was also recently completed in September. It is master-leased to a single tenant on a seven year fixed non-cancellable lease and is just two kilometres from JR Osaka Station within the City of
The master lessee, Aki Co. Ltd, is a leading residential leasing specialist in the
Babcock & Brown Japan Property Management Limited’s managing director Eric Lucas said the acquisitions are consistent with the trust’s investment philosophy.
He said following the acquisition of these properties a guidance of not less than 6.72¢ of distributable cash flow per Unit is provided for the six months ending June 30 2008. This represents a forecast increase of 9.2% compared to the prior corresponding period and 6.2% compared to the estimated distribution per Unit of 6.33¢ for the six months ending December 31 2007.
“We are delighted that our strategy of active asset management and selective acquisitions is on target to generate a compound annual growth rate,” he added.
These acquisitions have been funded predominantly through new debt raised in
The blended borrowing cost of BJT’s debt post-acquisitions is 2.18%.
The post-acquisition gearing will increase to 64.2% (or 62.1% if cash is included), which is above the Trust’s previously stated target gearing range of 50%-60%.
Lucas said in spite of the current volatility in the capital markets, BJT’s access to debt financing remains strong.
“The new facilities arranged for these acquisitions demonstrate the confidence of commercial banks in the BJT investment strategy and platform, as well as the strength of the operating cash flows,” he continued.
Lucas said he was disappointed that BJT’s Unit price appears to have been negatively impacted by market concerns about the refinancing risk facing less conservatively structured Listed Property Trusts.
“We are optimistic that the market will positively re-assess BJT’s valuation in light of the continued strong operating performance of its assets, the consistent growth in distributable earnings per Unit which has been delivered and the low refinancing risk profile of the trust,” he concluded.
These acquisitions increase BJT’s portfolio value by 13.6% to ¥165.5 billion ($A1.7 billion). They also increase the average asset size in the portfolio from ¥3.3 billion to ¥3.6 billion, in line with our previously stated objective.
Australian Property Journal
