Macquarie trust debuts in Japanese retail

SINGAPORE listed Macquarie MEAG Prime REIT has moved into the world's second largest retail market, Japan, with the purchase of seven properties in Tokyo for ¥14.4 billion.

MMP REIT has bought seven properties situated in the sought-after areas of Roppongi, Shibuya-ku, Minato-ku and Meguro-ku.

“This marks the start of our Japan and regional strategy and with these acquisitions, we look forward to developing long-term relationships with some of the key players in the Japanese real estate industry. We are actively pursuing other acquisitions opportunities in Japan and elsewhere and are optimistic that we will be making further acquisitions in the foreseeable future.”

Macquarie Pacific Star’s chief executive Franklin Heng said.

Six properties are completed, predominantly for retail purposes and have been acquired from Fund Creation, an asset management and financial brokerage firm listed on the JASDAQ since October 2006 and has a current market capitalisation of approximately ¥48.3 billion.

The seventh property, the FLEG America-Bashi Building, is a seven-storey retail turned office development in the Ebsiu area of Shibuya-ku and is currently under construction and due for completion in September 2007.

The FLEG America-Bashi Building has been acquired from FLEG International, a major Japanese retail leasing group and a growing real estate developer with over 14 years of experience and more than 100 properties under its management.

FLEG International’s sales turnover increased from approximately ¥14.9 billion in 2004 to approximately ¥25.6 billion in 2006.

“Japan is the second largest retail market in the world after the United States. We believe we are witnessing the beginning of a sustained recovery in consumer spending and in property prices and rents.

“The yield-accretive acquisitions of predominantly retail properties comes amid a recovery in Japan’s economy and real estate market. According to government data announced in March 2007, Japanese land prices posted a general rise for the first time in 16 years. Commercial property prices, in particular, increased by an average 2.3% in 2006 compared to the previous year,” he added.

Heng noted that the portfolio of properties being acquired would enable MMP REIT to enjoy stable, recurring income and at the same time, benefit from the upside of a rising market.

“This is the first regional acquisition for the investment trust since its listing on the Singapore Stock Exchange in September 2005,” he concluded.

The market values of the seven properties, assessed independently by Tokyo Asset Research as at March 30, 2007, are approximately 1.5% higher than their respective purchase prices; the market value of the Fund Creation Portfolio was about ¥8.9 billion while that of the FLEG America-Bashi Building was about ¥5.8 billion.

Australian Property Journal