Starhill Global Reit to sell Tokyo property for 1.88b yen

STARHILL Global Real Estate Investment Trust (Reit) has agreed to sell its entire beneficial interests in a Tokyo property for 1.88 billion yen (S$18.9 million), its manager said in a statement on Friday (Dec 30).

The sale consideration is a 39 per cent premium to its latest valuation and 2.9 per cent premium to its acquisition price, in what the Reit manager described as “attractive”. The Reit acquired the property in 2007.

The manager added that the amount would translate to a yield of 2.77 per cent, based on the net property income for the financial year ended Jun 30, 2022.

The property – a three-storey retail and office building – is located in the Ebisu district in the Shibuya ward, and has a net lettable area of 8,087 square feet. It is a three-minute walk from Daikanyama station.

It accounts for about 0.5 per cent of Starhill Global Reit’s asset value as at Sep 30, and 0.4 per cent of its portfolio net property income based on what was reported for the financial year ended Jun 30.

The sale is expected to complete early next year.

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The manager said the sale is consistent with the Reit’s capital recycling strategy. 

Starhill Global Reit’s gearing is expected to drop from 36.5 per cent to 36.1 per cent after the divestment, assuming that the net sales proceeds are substantially used to repay yen borrowings.

Meanwhile, the manager said the pro forma financial effects of the sale on the distribution per unit of the Reit and the net asset value per unit are not expected to be material.

It was also disclosed that the manager will take a divestment fee of 0.5 per cent of the sale consideration pursuant to the trust deed constituting the Reit. The manager has elected for it to be paid in cash. 

After the sale, the Reit would be left with one asset in Japan, Ebisu Fort, which has an asset value of 3.62 billion yen. This property represents 1.3 per cent of the Reit’s asset value.

Ho Sing, chief executive officer of the Reit’s manager, said regardless of the Reit’s Tokyo divestments in the past few years, Japan remains one of its key markets of interest.

“We will continue to explore potential investment opportunities,” he said. The ongoing divestment is meant to unlock value, pare down debt and provide it with greater financial flexibility and capacity to focus on new assets that align with its growth strategy, Ho added.

Units of Starhill Global Reit closed 0.9 per cent lower at S$0.54 on Friday.