CapitaLand buys four properties in Japan for S$620 million

SINGAPORE — CapitaLand, South-east Asia’s largest developer, said on Friday (Feb 17) it has agreed to buy four properties in Japan for 49.7 billion yen (S$620.1 million) to broaden its footprint in Asia’s second largest economy.

Through its wholly owned shopping mall business CapitaLand Mall Asia, CapitaLand will acquire two office buildings in Yokohama – Yokohama Blue Avenue and Sun Hamada; one office building in Tokyo – Kokugikan Front; and one shopping mall in Saitama – Seiyu & Sundrug. Including transaction costs, the total investment for the portfolio is about 51 billion yen.

The deal will strengthen CapitaLand’s foothold in Greater Tokyo, the world’s most populous metropolis, and increase the group’s total asset size in Japan to about S$2.5 billion, the property giant said.

Mr Jason Leow, CEO of CapitaLand Mall Asia and Co-ordinating CEO, Asia of CapitaLand said: “As the capital of Japan, Tokyo is a key global city and Asia Pacific’s top real estate development and investment market, drawing investors with the country’s economic stability, low borrowing costs and high return prospects. Even as Japan’s total population declines, the population in Greater Tokyo area has been increasing, reaching nearly 38 million people in 2015. This trend is expected to continue, underpinning Greater Tokyo’s economic development with an expanding labour force.”

“This latest acquisition will deepen the Group’s presence in Greater Tokyo through assets with stable yields and recurring cash flow. Immediately accretive with upside potential, this acquisition will contribute a net operating income of about S$25 million per year, providing CapitaLand with a stable source of income as we continue to expand our business,” he added.

Mr Kek Chee How, Country Head, Japan, CapitaLand Mall Asia, said: “The long-term forecast of Greater Tokyo’s office market remains positive, with vacancies in central Tokyo expected to stay below 5 per cent through to 2025. As the three office buildings we are acquiring are stabilised assets located in areas with limited new supply, we are confident they will continue to generate stable recurring income.”

“On the retail front, our acquisition of Seiyu & Sundrug, a popular destination among locals in Saitama Prefecture for necessity shopping, is a welcome complement to our existing shopping mall portfolio. With a gross floor area of close to 400,000 square feet, Seiyu & Sundrug will grow CapitaLand’s retail footprint in Japan by about 25 per cent to over 2 million square feet in GFA,” he said.

The acquisition will be financed by a combination of internal funds and borrowings, and is expected to be completed in the first quarter of this year, CapitaLand said.

Following the pre-market announcement, CapitaLand shares rose 0.3 per cent to close at S$3.46 on Friday, compared with the 0.4 per cent gain in the Straits Times Index to 3,107.65.